October new home sales up 9 percent nationally

According to U.S. Department of Commerce figures released Nov. 29, sales of new single-family homes jumped 13 percent to a record seasonally adjusted annual rate of 1.424 million units in October, an increase of 9 percent from a year ago.

“Home builders continue to see healthy demand for new homes and expect sales activity to continue at slightly more moderate levels in the months ahead,” said David Wilson, president of NAHB and a custom home builder from Ketchum, Idaho, in an NAHB news release. “Our monthly Housing Market Index surveys of builders show that a majority have maintained a positive view of future sales but that builder sentiment has moved down from midyear highs.”

NAHB Chief Economist David Seiders characterized the strength of October sales as “surprising.”

“The upshift in interest rates may have pushed a lot of fence sitters into a buying mode, and builders may have deepened sales incentives to counter growing buyer resistance to home prices and interest rates,” Seiders said in the release. “But it’s also likely that today’s report overstates the true pace of home sales because of well-known statistical deficiencies.”

Seiders noted that the Commerce Department’s monthly estimates experience a high degree of sampling variability and substantial revision, especially on a regional basis.

“Indeed, the statistical confidence intervals around sales estimates for the Northeast and West regions are particularly wide, and these regions drove the national sales numbers sharply upward in October,” Seiders said. “More data will be required to assess the true condition of the housing market as we move ahead.”

Three of four regions across the country posted increased sales of new homes in October, with the West and the Northeast regions experiencing the most dramatic rises.

Sales in the West jumped 46.9 percent and sales in the Northeast were up 43.3 percent from the month before. Sales in the South increased by 1.9 percent and sales in the Midwest dropped 9.5 percent.

The inventory of new homes for sale was 496,000 at the end of October, which is more than four months’ supply at the current sales pace. Of that total, for-sale units that were not yet started represented 20 percent. Units still under construction were 59 percent of the inventory, and completed homes for sale were 21 percent of the total – a smaller portion than a year ago.

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