Sales of newly built homes fell to their lowest level in two years in October as high mortgage rates and property prices discouraged potential buyers.

St. Louis Federal Reserve Bank data shows new home sales fell by more than 100,000 units last month, reaching a seasonally adjusted annual rate of 610,000. A month earlier, in September, 738,000 new units were sold, meaning new sales fell 17.3 percent compared to the previous month.

While the rate of new home sales has peaked and fallen throughout the year so far, the last similarly low sales figures were reported in November 2023, when 611,000 units were sold. Previously, the most recent significant low of 519,000 monthly sales was reported in July 2022.

Due to more favorable purchasing conditions, particularly low interest rates, during the coronavirus pandemic, the US real estate market has been difficult for buyers for several years.

“Homebuyers have been burned out on the real estate market since the pandemic and fatigued by record-high prices and stubbornly high interest rates,” said Nick Gerli, real estate expert and CEO of Reventure Newsweek. “There will be no quick fix in this market. Prices need to go down and wages/incomes need to go up so that homebuyers feel more comfortable about owning their own home.”

Home affordability in the United States has become a major issue in recent years. The current median home price in the U.S. for the third quarter of 2024 is $420,400, an increase of more than $100,000 from $317,100 in the second quarter of 2020, according to the St. Louis Federal Reserve Bank.

Higher prices correlate with a decline in home sales, and new homes aren’t the only properties where sales are down. Data from the National Association of Realtors (NAR) shows existing home sales are now below the record low during the COVID-19 lockdown in May 2020. In October 2024, the US recorded 3.96 million completed sales, compared to 4.09 million in May 2020, although this month’s figure is above the previous low of 3.83 in September 2024.

Existing home sales have also declined significantly since January 2022, when interest rates bottomed and 6.43 million homes were sold, NAR figures show. By January 2023, when interest rates rose to 4.5 percent, sales fell to 4.07 million. Although there have been fluctuations in sales since then, the market has not recovered to the typical pre-pandemic monthly sales of around 5 million.

Due to current market conditions, the overwhelming majority of Americans believe that now is a bad time to buy a home, according to the University of Michigan consumer survey in October. It found that 82 percent of 948 respondents believe now is not a good time to buy a home, compared to 77 percent in October 2023.