New Home Sales Decline 2% in October

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The U.S. Census Bureau and the Department of Housing and Urban Development reported Wednesday morning that sales of new homes in October slipped to a seasonally adjusted annual rate of 563,000, a decrease of 1.9% below the revised September rate of 574,000 and an increase of 17.8% compared with the October 2015 rate of 478,000. The consensus estimate from a survey of economists expected a rate of around 601,000.

The September rate was revised downward by 19,000. The consensus estimate called for sales of 590,000.

At the peak in 2005, new home sales posted a seasonally adjusted annual rate of nearly 1.4 million.

The Census Bureau also reported that the median sales price for new homes sold in September dipped by $9,000 from $313,500 in September to $304,500, and the average sales price fell by $22,800 to $354,900. At the end of October the number of new homes for sale totaled 246,000 and represented a supply of 5.2 months at the current sales rate.

In October, 49% of the estimated 45,000 monthly sales were sales for homes priced at less than $300,000. The percentage is 6 points higher than the September rate. Sales of homes priced between $300,000 and $399,999 fell by 1 point to 27% of all sales. Sales of homes in the range of $400,000 to $499,999 fell from 13% to 11%, and sales slipped from 11% to 9% for homes sold in a range of $500,000 to $749,999. Home sales for properties priced above $750,000 accounted for 4% of all new home sales in October, up 1 point from the September rate.

Rising interest rates following the elections had no effect, of course, on October sales or prices, but now that mortgage interest rates have parked above 4% for a week there is likely to be some effect on November sales, even though rates remain near historic lows.