Single-family new residential sales increased significantly from last year, however they dropped from September to October, according to the latest joint release from the U.S. Census Bureau and the Department of Housing and Urban Development.
Sales of new single-family houses in October increased 17.8% from last year’s 478,000 to 563,000 sales. This is a decrease of 1.9% from the 574,000 sales in September.
“Looking past monthly volatility, the 12-month rolling total of new homes sales was the best in over eight years and boosts sales to 85% of the 50-year norm,” Trulia Chief Economist Ralph McLaughlin said.
“New homes are helping satisfy homebuyers constrained by low resale inventory, but sales have room to grow,” McLaughlin said. “In October, new home sales represented about 11.6% of all sales, which is less than half of the pre-recession average of 23.6%.”
The median sales price of new homes sold in October came in at $304,500, while the average sales price came in at $354,900. These are both significantly down from September’s median home price of $313,500 and average home price of $377,700.
“Although median house prices dropped in October, this is explained by seasonality – with the 12-month change in prices still positive,” Nationwide Chief Economist David Berson said.
However, this does not hold true for all homes on the market. Home prices increased in the third quarter, showing that the deceleration in home prices during the second quarter was short-lived, according to the Federal Housing Finance Agency Home Price Index.
The seasonally adjusted estimate of new houses for sale at the end of October was 246,000. This represents a supply of 5.2 months at the current sales rate, an increase from September’s 4.8 months’ supply.
“Supply conditions continue to be tight with only 5.2 months of inventory, but recent housing starts data show that the pace of home construction is picking up,” Berson said. “With demand conditions expected to stay strong, residential construction will need to keep pace in order to support further sales growth.”