New Home Sales at 10-Year High

New home sales, boosted by mild weather, jumped to a 10-year high in October, HUD and the Census Bureau reported yesterday.

The report said sales of new single-family houses in October rose to a seasonally adjusted annual rate of 685,000, 6.2 percent higher than the revised September rate of 645,000 and 18.7 percent higher than a year ago (577,000).

All four Census regions saw sales increases, the largest percentage increase taking place in the Northeast, where sales jumped by 30.2 percent to 56,000 units, seasonally adjusted, from 43,000 units in September and improved by nearly 65 percent from a year ago. In the Midwest, sales jumped by nearly 18 percent to 79,000 units in October from 67,000 in September and improved by more than 16 percent from a year ago.

In the South, sales rose by 1.3 percent to 383,000 units, seasonally adjusted, in October from 378,000 units in September and improved by 14 percent from a year ago. In the West, sales rose by 6.4 percent to 167,000 units in October from 278,000 in September and improved by 20.1 percent from a year ago.

MBA Associate Vice President of Industry Surveys and Forecasting Joel Kan noted following an August sales pace of 565,000 units, which was thought to be temporarily dampened by the hurricanes, the average new home sales pace for September and October has averaged more than 17 percent higher than in August.

“Additionally, MBA’s Builder Applications Survey results [released November 14] showed a significant increase in October 2017 new home sales as well,” Kan said. “Data from the BAS showed a seasonally adjusted increase of 15.4 percent to 659,000 units from the September pace of 571,000 units. These results were both ahead of expectations when compared to MBA’s November forecast of a 591,000 unit pace for new home sales in the fourth quarter.”

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said the huge sales boosts in the Northeast and Midwest suggest mild weather played a big role in the upbeat report.

“The increases bring new home sales to a new cycle high and are somewhat surprising given concerns about the lack of inventory,” Vitner said, noting the Northeast and Midwest are the smallest region for new home sales “and often greatly influenced by atypical swings in the weather.”

HUD/Census said the median sales price of new houses sold in October fell to $312,800; the average sales price rose to $400,200. The seasonally adjusted estimate of new houses for sale at the end of October rose to 282,000, representing a supply of 4.9 months at the current sales rate.