US New Home Sales Rose 7.5% in October as Average Sales Price Jumped 11.5%

New home sales increased 7.5% month-over-month in October to a seasonally adjusted annual rate of 632,000 units (consensus 578,000) from a downwardly revised 588,000 (from 603,000) in September. The surprise rise went against the recent drawdown in housing demand as the Federal Reserve aggressively tightens monetary policy. Higher mortgage rates and higher prices pressured affordability even more for prospective buyers. On a year-over-year basis, new home sales were down 5.8%.

Home Sale
Home sales

US new home sales for October 2022

  • New home sales increased 7.5% month-over-month in October to a seasonally adjusted annual rate of 632,000 units (consensus 578,000) from a downwardly revised 588,000 (from 603,000) in September.
  • On a year-over-year basis, new home sales were down 5.8%.
  • The median price of new houses sold was $493,000, average sales price jumped 11.5% to $544,000.
  • The jump in median and average selling prices was skewed by higher-priced homes accounting for a larger percentage of total new homes sold.
  • At the current sales pace, the supply of new homes for sale stood at 8.9 months, versus 9.4 months in September and 6.9 months in October 2021. A six-month supply is typically associated with a more balanced market.
  • There were 470,000 houses left to sell, up 21.4% from one year ago and corresponding to 8.9 months of supply at the current sales rate
  • The percentage of new homes sold for $399,999 or less accounted for 30% of new homes sold versus 35% in September and 43% one year ago.
MONTHLY NEW RESIDENTIAL SALES, October 2022

New home sales month-over-month/year-over-year by region:

  • Northeast (+45.7%/+59.4%)
  • Midwest (-34.2%/-26.5%)
  • South (+16.0%/-0.3%)
  • West (-0.8%/-22.8%)

Note new home sales in the West has the highest concentration of higher-priced homes.

The report confirms the effect of rates and new home sales remain concentrated in higher-priced homes, as inflation pressures, pushed by supply constraints and labor shortages, are curtailing the building of lower-priced homes and pinching affordability for lower-income buyers.

United States New Home Sales

Existing home sales account for 90% of US transactions and are calculated on a contract close basis. New home sales account for the remaining 10% and are based on contract signings.

The big question is after the surge in rates and slash in rates how much damage has been done with the massive wealth erosion.

Source: Census.gov

From The TradersCommunity News Desk