Sales of new single-family homes dipped 0.7% to 733,000 in October, not materially different from the 738,000 of September. Sales soared 31.6% compared to a year-ago. Low mortgage rates can take the credit in both cases. Consumers withdrew from the housing market around this time last year when mortgage interest rates were on the rise, and have returned now that rates are back near three year lows.
Homebuilders have responded to demand for homes with new construction, some of which is smaller and more affordably priced units due to limited supplies in the market for similar existing units. This is at least partially responsible for the year-over-year decline of 3.5% in the median home prices to $316,700 although it is 2.1% above the prior month.
The supply of homes on the market was about 5.3 month’s worth for October, much the same as the 5.2 months in September. This remained consistent with scant supplies of new homes for sale.
Consumers are also more willing to contract to buy units not yet started (250,000 or 34.1% of the total and up from 220,000 in September). The trend to committing to an unstarted home means that completed units are scarcer which may in part account for the decline in October (246,000 or 33.6% of the total from 270,000 in September). Sales of units under construction were not much changed in October (237,000 or 32.3% of the total from 248,000 in September).
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