Homebuilders must be feeling the whiplash as new single-family home sales continued to yo-yo into October. after bouncingFrom a drop in July only to fall again New home sales rose again in October, according to posted on wednesday by US Department of Housing and Urban Development (HUD) and the US Census Bureau.
New single-family home sales in September posted a seasonally adjusted annual rate of 632,000, up 7.5% from September but down 5.8% from a year ago.
“Builders are offering incentives from price cuts and fee reductions to upgrades,” Odeta Kushi, first american‘s deputy chief economist, in a statement. “The higher number of new home sales this month indicates some elasticity of demand in the new home market.”
As the pace of sales picked up, the median sales price increased from $460,600 in September to $493,000 in October.
“Average prices increased despite the fact that. The increase in new home prices reflects a change in the mix of homes sold, with fewer homes selling at lower prices, so the median price has increased, and higher construction costs are being passed on to the consumer.” Kushi said. . “A year ago, 18% of new home sales were priced below $300,000. In October 2022, only 12% of new home sales were priced below $300,000. Looking back at pre-pandemic levels in October 2019, it was 43%.”
In addition, the amount of inventory also dropped to 470,000 homes for sale or the equivalent of 8.9 months’ supply at current sales pace, down from 9.2 months’ supply in September.
Regionally, new home sales increased month-over-month in October in the Northeast (45.7%) and South (16.0%), but decreased in the Midwest (34.2%) and West ( 0.8%). Year-over-year, new home sales declined in three of four regions, with the Midwest posting the largest annual decline at 26.5%, and the Northeast posting a year-over-year decline of 59.4%.
Despite the national rebound in new home sales in October,continues to fall, reaching its lowest level since June 2012 in November, with a National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) reading only 33.
“October’s report surprised to the upside, but leading indicators (permitting and builder confidence) indicate continued weakness,” Kushi said. “There is a large amount of housing started but not yet finished in the pipeline, so prices will need to be adjusted to make the new homes attractive enough to attract more buyers.”