
HUD/Census: New Home Sales Slip
New home sales slipped in October, HUD and the Census Bureau reported.
The report said new single-family home sales fell by 1.9 percent to 563,000 last month, seasonally adjusted, compared to 574,000 (revised) in September. Sales were 17.8 percent above a year ago (478,000).
“New home sales are up year-over-year, but there’s still much room to grow,” said Ralph McLaughlin, Chief Economist with Trulia, San Francisco.
McLaughlin noted that despite some month-to-month volatility, the 12-month new home sales rolling total reached an eight-year high in October, boosting sales to 85 percent of the 50-year average–up 1 percentage point from September.
“The 12-month rolling total of new home sales compared to the 50-year average looks like there’s a lot more room to grow when taking into account the size of the U.S. population,” McLaughlin said, noting that new home sales per 1,000 U.S. households equaled 4.7 in October, less than two-thirds the normal figure.
“If we compare the share of new home sales to total sales, that share needs to more than double,” McLaughlin said. “While it’s been tough for homebuyers to buoy existing home sales because of low inventory, it looks like there is much potential for new homes sales to run higher.”
Last week the National Association of Realtors said existing home sales rose 2 percent in October to a 5.6 million unit annual pace. “Mild fall weather and low interest rates brought out buyers,” said Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C. “Inventories remain tight and continue to constrain sales.”
Vitner said fears about higher mortgage rates may have pulled some future sales forward during October.
“While it’s still uncertain how a Trump administration will affect homebuilding activity, over half of all new home sales are in the red-leaning South, where homebuyer and builders may be feeling a renewed sense of confidence about the year ahead,” McLaughlin said.