New Home Prices Rise; October Slip

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Pace of contracts for new home sales EDGED DOWN 0.7 percent in October to a seasonally adjusted annual rate (SAAR) of 733,000;
  • The September sales pace originally reported as 701,000 was REVISED UP to 737,000
  • The inventory of unsold new homes ROSE 1,000 in October to 322,000;
  • The months’ supply of new homes for sale ROSE to 5.3 in October from 5.2 in September;
  • Median price of a new home RECOVERED to $316,700 in October, up $6,500 after falling $16,500 in September;
  • Year-year the median price of a new home is DOWN 3.5 percent or $11,600.

Trends:

  • The sales pace for new single-family homes is up a sharp 31.6 percent year-year;
  • Though up in October, the median price of a new single-family home has fallen in eight of the first 10 months of this year;
  • The number of homes for sale is at its second lowest level since August 2018

Data Source: Census Bureau and Department of Housing and Urban Development

Image result for new home sales

Sales of new single-family homes remained up from 2018 even as prices rose, the Census Bureau and Department of Housing and Urban Development reported Tuesday. Even with the October increase, the median price of a new single-family home remained below 2018 levels as it has for most of this year.

That the pace of sales slipped in October was a function of a significant revision to the September sales pace which was revised up from 701,000 to 737,000. Still the higher number may not reflect eventual sales since this government report measures contracts for sale, not actual closings. The parallel report on existing home sales, that is pending home sales, is expected from the National Association of Realtors Wednesday.

A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the October reading of 737,000 units is the number of homes that would sell if this pace continued for the next 12 months.

The year-year jump in new home sales is in part attributable to rebuilding in the South in the wake of storm damage. In the last five months the year-year increase in new home sales in the South has averaged 28 percent compared with about 5 percent in the Northeast, a 1.7 percent decline in the Midwest and an increase of 14.6 percent in the West.

That said, homebuilding is looking somewhat rosier with the recent Census-HUD report on housing permits and starts. According to the government, the pace single-family home permits rose 3.2 percent in October – the sixth consecutive monthly increase – and single-family starts rose 2 percent in October, up for the fifth straight month and the eighth month-month increase this year.

Hear Mark Lieberman on P.O.T.U.S. (Sirius-XM 124) Friday at 6:20 am Eastern Time. You can follow Mark Lieberman on Twitter at @foxeconomics.

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