New home sales fall 0.3% in October
After a spike in September, new single-family home sales fell 0.3% to 368,000 last month, according to the U.S. Census Bureau.
Sales dropped from September’s 389,000, but were 17.2% higher than a year ago when only 314,000 units were sold.
In October, the median sales price of a new home was $237,000, while the average sales price was $278,900.
“The Commerce Department doesn't note any specific reasons for the downward revision to September but it does note that Hurricane Sandy had only a minimal effect on October, hitting at month end and in an isolated area of the country,” said research firm Econoday. “Sales in the Northeast, which in any case is by far the least active region in the report, fell 32 percent in the month.”
At the end of October, the number of new homes for sale reached 147,000, representing a 4.8-month supply of homes at today's sales pace.
“Attention turns tomorrow to the pending home sales index which will offer an advanced indication on existing home sales which, like new home sales, have had difficulty gaining much steam,” said Econoday.
Barclays Capital analyst Cooper Howes placed the numbers into a forward-looking perspective. "In our view, the pace of new home sales would have to pick up in order to continue the upward trend in housing starts," he said, "given that we believe homebuilders are becoming more comfortable carrying inventory levels that have stabilized a bit above 4.5 months, we expect start activity gradually to plateau unless sales activity increases."
"The small fall in new home sales in October, and the downward revision to September’s figures, mean that the recovery in new home sales is looking a little weaker than we were previously led to believe," said Capital Economics. "Nevertheless, we expect activity in the new homes market to improve further next year."