Morgan Stanley: Existing-home prices fell faster in October as listing and viewing signals diverged

Why are home prices falling faster despite resilient transactions?

CREIS existing-home prices across one hundred cities fell 0.61% month on month in October, slightly more than the 0.60% decline in September, marking the sixth consecutive month of widening declines. Prices fell 6.7% year on year and 4.9% year to date.
Existing-home prices in the top ten cities fell 0.66% month on month in October, a significantly wider decline than the 0.54% drop in September, despite resilient local existing-home sales. Morgan Stanley believes the large number of listings gives sellers more flexibility in pricing, keeping prices under downward pressure.

Existing-home asking prices in the 85 cities tracked by Morgan Stanley fell 0.6% month on month in October, the same decline as in September. They fell 7.8% year on year and 5.0% year to date.
Price cuts remain widespread, but the share of cities where declines widened fell from 52% in September to 38% in October. The bank believes continued cuts to asking prices will keep putting downward pressure on transaction prices in the coming months.
New listings fell 2% month on month in October, while total listings across approximately 50 cities fell only 0.2% month on month. In this sample, 41% of cities had more listings than at the end of 2025, and 10% were at historical highs.

Visits to agency branches across 34 cities increased 13% month on month and 3% year on year in October, showing seasonal growth similar to previous years.
Morgan Stanley expects existing-home sales to remain strong on both a month-on-month and year-on-year basis in the coming months. Slower new-home launches and the wider reach of mortgage subsidies among buyers in the existing-home market will provide support; a lower comparison base will also help the existing-home market continue to gain share.
Resilient sales and pressure on prices can coexist. The bank expects the weak macroeconomic environment to continue weighing on home prices for the rest of the year, even as slower new-home launches and mortgage subsidies provide support.

The bank expects property stocks to remain under pressure for the rest of the year: the impact of mortgage subsidies has been disappointing, near-term catalysts are limited, valuations of some state-owned developers are high, and fundamentals remain weak. The report said the sector's share prices fell 14% on average in October.
The sector view is in line with the market. In stock selection, the bank favors companies with credible self-help initiatives, including China Resources Land and Seazen group A-shares and Hong Kong-listed shares.