Sales of new homes fell in October to an annualized rate of 733,000, according to the Census Bureau and the Department of Housing and Urban Development, but it still looks like 2019 is going to a vast improvement over 2018.
According to the Census data, the October pace fell slightly off September’s pace, which was upwardly revised from 701,000 to 738,000.
But given that September’s rate was adjusted up as much as it was, October’s pace looks strong, especially when considering that October’s total was 31.6% higher than October 2018, when it was 557,000.
“Aside from one disappointing month in the spring, 2019 has been a resurgent year for new home sales, and this stronger-than-expected October data – on the heels of strongly upwardly revised September data – only reinforces the trend and proves that high builder confidence is not entirely unwarranted,” Zillow Economist Matthew Speakman said.
According to analysis by the National Association of Home Builders, new home sales for 2019 are 9.6% higher so far this year than during the same period in 2018.
Beyond that, the past two months represent the highest monthly sales rate since October 2007.
The seasonally adjusted estimate of new homes for sale by the end of October was 322,000. This represents a supply of 5.3 months at the current sales rate, holding steady from the previous month.
The median sales price of new homes was $316,700, while the average sale price was $383,300.
National Association of Realtors Chief Economist Lawrence Yun said that these sales represent a solid demand for housing.
“This huge jump from one year ago partly reflects builders now building less expensive homes. Several of today’s fresh data on home price and new home sales, combined with earlier data on existing-home sales and the median home price, essentially say the same thing: housing demand is solid,” Yun said. “But buyers are facing not enough choices. Therefore, prices are getting bid up, especially in the starter home market and in the Mountain States.”
The latest Housing Market Index, which gauges homebuilder market sentiment, indicates that homebuilder confidence rose to 70 points in October, just three points more than in September.
NerdWallet Home and Mortgage Specialist, Holden Lewis, said that builders are now making homes that the consumer can afford.
“Excluding September, this is the strongest pace of new home sales since July 2007, before the housing crash,” Lewis said. “With a boost from low interest rates, builders are succeeding in making new homes that people can afford.”