New Home Sales Plummet 17.3% in October

Sales of new single-family houses during October were at a seasonally adjusted annual rate of 610,000, according to estimates published by the U.S. Census Bureau and the Department of Housing and Urban Development. This represented a 17.3% drop from the revised September rate of 738,000 and is 9.4% below the October 2023 estimate of 673,000 – it is also the lowest level recorded since November 2022.

The median sales price of new houses last month was $437,300 and the average sales price was $545,800. The seasonally-adjusted estimate of new houses for sale at the end of October was 481,000. This represents a supply of 9.5 months at the current sales rate.

Danushka Nanayakkara-Skillington, assistant vice president for forecasting and analysis at the National Association of Home Builders, blamed the disappointing numbers of multiple factors.

“Higher mortgage rates, up 60 basis points in October per Freddie Mac, and elevated home prices continued to worsen affordability challenges,” she said. “Despite these headwinds, which also include increased material costs for builders, new construction remains a vital part of the market, especially in areas with low existing home inventory.”

First American Deputy Chief Economist Odeta Kushi also noted the convergence of challenging circumstances in driving down sales.

“The new-home market has been a relative bright spot in housing, but a combination of factors converged to sap its momentum in October,” she said. “Weather-related disruptions and the October surge in mortgage rates have dampened demand, even amid a rise in new-home inventory, which reached its highest point since 2008.”

Dr. Anthony B. Sanders, chief economist at Artesia Economics, noted on his Confounded Interest blog that the October data represented the largest month-over-month decline since July 2013. Sanders acknowledged that “Hurricanes Helene and Milton, which tore through parts of the Southeast, delayed sales in the nation’s biggest housing region and dragged down sales overall. Sales in the South decreased 28% to 339,000, the slowest pace since April 2020.”

Sanders also declared that the new data represented the “last gasp of the Biden/Harris reign of (economic) error!”