October New Home Sales Beat Expectations

October new home sales rose by 7.5 percent from September, beating consensus expectations, the Census Bureau and HUD reported Wednesday.

The report said sales of new single‐family houses in October rose to a seasonally adjusted annual rate of 632,000, 7.5 percent higher than the revised September rate of 588,000, but 5.8 percent lower than a year ago (671,000).

Courtesy HUD, U.S. Census Bureau.

Regionally, sales were mixed, although the largest region, the South, exerted great influence on the overall results. Sales in the South jumped by 16 percent in October to 399,000 units, seasonally annually adjusted, from 344,000 units in September; from a year ago, sales fell by 0.3 percent.

In the West, sales fell by 0.8 percent in October to 132,000 units, seasonally annually adjusted, from 133,000 units in September and fell by nearly 23 percent from a year ago. In the Midwest, sales fell by 34.2 percent to 50,000 units in October from 76,000 units in September and fell by 26.5 percent from a year ago. In the Northeast, sales jumped by nearly 46 percent in October to 51,000 units from 34,000 units in September and rose by 59.4 percent from a year ago.

“Sales of new single‐family houses in October 2022 exceeded consensus expectations,” said Odeta Kushi, Deputy Chief Economist with First American Financial Corp., Santa Ana, Calif. “Builders are offering incentives from price cuts and rate buydowns to upgrades. This month’s higher new-home sales number indicates some demand elasticity in the market for new homes.”

However, Kushi noted while the report surprised to the upside, other leading indicators—such as permits and builder confidence – indicate ongoing weakness. “There is a large number of started, but not-yet-completed homes in the pipeline, so prices will need to adjust to make new homes attractive enough to entice more buyers,” she said.”

The report said the median sales price of new houses sold in October rose to $493,000; average sales price rose to $544,000. 

The seasonally adjusted estimate of new houses for sale at the end of October rose to 470,000, representing a supply of 8.9 months at the current sales rate.