What the lowest home sales since 2010 actually mean for a brokerage, a mover and a furniture store

US existing-home sales fell 5.5% in October to a seasonally adjusted annual rate of 3.75 million, the slowest pace since August 2010, according to Realtor.com's report on the National Association of Realtors release. Sales were down 8.8% from a year earlier. Bloomberg and MarketWatch both led with the same low. The headline is about buyers. The people hurt first are the ones paid at the moment a household moves.

The numbers behind the headline

• Sales: 3.75 million annual rate, down 5.5% on September and 8.8% on a year ago (NAR, via Realtor.com).
• Price: the median sale price was $416,700, up only 0.4% from a year ago. Sales fell in every price tier, including $1 million and up.
• Supply: 1.59 million homes for sale, a seven-year high, which is 5.1 months of supply.
• Region: the West fell 9.7% on the month and 14.5% on the year.
• Rates: Realtor.com, citing Freddie Mac, puts October's average 30-year rate at 7.33%, up from 6.86% in September. The latest weekly Freddie Mac reading we pulled today, for Nov. 5, was 7.18%.

Closed sales trail contracts by 30 to 60 days, so October is partly a picture of deals signed at the end of summer. The forward-looking number is worse. Redfin's update for the four weeks ending Nov. 8 shows seasonally adjusted pending sales at 275,980, down 15.5% from a year earlier and the lowest in Redfin's records, with declines in every metro it tracks. New listings were down 4.7%, so sellers are not flooding the market either. Our story yesterday on mortgage demand covered the rate side; this is the volume side.

What a higher rate does to a monthly payment

On a $400,000 loan, principal and interest at 6.86% is about $2,624 a month. At 7.33% it is about $2,750. That is $127 a month, or $1,524 a year, before taxes and insurance. At 7.18% it is about $2,710. Redfin puts the median monthly payment at $2,755 at that rate. A buyer who was just inside a lender's debt-to-income limit in September is just outside it now, and that is how a 47-basis-point move turns into an 8.8% drop in deals.

Three businesses, three different hits

An independent brokerage. Assume a 2.5% commission on one side of a sale. On the $416,700 median that is about $10,418 gross. An agent who closed 20 sales at last year's pace would close about 18.2 at this year's, which is 1.8 fewer deals, or roughly $18,300 less in gross commission. If the brokerage keeps 20% of that, it loses about $3,700 per agent per year, or about $55,000 across a 15-agent office. The risk is not the revenue line alone. Agents with two slow quarters leave for a bigger brand with a better split, and the fixed rent stays.

A local mover. Suppose 30% of your jobs come from households buying or selling (check your own books; this share varies a lot). An 8.8% drop in sales takes about 2.6% off revenue. If pending sales are the better guide, down 15.5%, it is closer to 4.7%. On $1.2 million of annual revenue that is between roughly $32,000 and $56,000. Our own data shows 42,966 independent moving companies on file across the country, so the competition for the jobs that remain is thick:

42,966 independent moving companies are listed on CheckThisBiz, a directory of 7,704,724 independent US businesses, including 4,510 in TX, 3,536 in CA, 2,472 in FL. Chains and franchises are excluded from that count, so these are the owner-operated businesses that actually apply for funding.

A furniture or home-goods store. New homeowners are the best customers for sofas, mattresses and appliances. Assume 15% of your sales follow a home purchase. A 15.5% fall in pending sales is about 2.3% of revenue, which on $800,000 is about $18,600. That is smaller than the mover's hit, but it lands on a low-margin category where a bad inventory call costs more than the lost sale. Landscapers, painters and cleaning companies tied to listings and move-ins sit in the same boat.

The case that this is the bottom

There is a reasonable counter-argument. The rate is down from the 7.40% peak on Oct. 8, home prices are slipping (Redfin's median sale price fell 0.9% from a year ago, the fourth straight weekly decline), and inventory is at a seven-year high, which gives buyers choice. If rates drift lower from here, pending sales could stabilise within a quarter. The risk is on the other side: Fed officials are discussing further hikes after the October inflation report, as we reported in our story on the Fed's split. That would push mortgage rates up, not down.

What to do

• Plan on flat-to-down volume through the winter. Pending sales are the leading number, and they have not turned.
• Do not cut ahead of the data. Hold crews and agents you can afford for one more quarter, and freeze new fixed costs such as a second truck lease, a new office or a spring inventory commitment.
• Work the share you can control. Movers: price commercial, storage and senior-downsizing work. Retailers: sell to renters and to owners who are staying put and renovating. Brokerages: rentals, property management and listings that sellers must make for life reasons.
• Run your own version of the arithmetic above with your real share of work tied to sales. If it is under 10%, this is a footnote. If it is over 40%, build a cash cushion now.

Sources: Realtor.com, reporting NAR data; Redfin; Freddie Mac; business counts from CheckThisBiz. Payment figures are principal and interest only, calculated by the Chronicle. Commission rates, splits and revenue shares are illustrative. This is market information, not investment advice.