New Home Sales Soar to 10-year Highs
After a slight dip in September, new home sales took off again last month to numbers new home builders haven't seen since prior to the Great Recession.
Indeed, sales of newly built, single-family homes in October rose 6.2 percent to a seasonally adjusted annual rate of 685,000 units, according to data released today by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
This is the highest sales pace since October 2007, despite the government revising September new home sales to 645,000 units from the previously announced 667,000.
Year-to-date, new home sales are running 8.9 percent higher compared with the same period last year. Meanwhile, the median home price went up 3.3 percent $312,800 compared with $302,000 over the same period.
"The October report shows strong sales growth at entry-level price points," said Granger MacDonald, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Kerrville, Texas. "In markets where builders are able to provide homes for families with different household budgets, they can fulfill a growing demand for housing."
It also means home builders continue to take advantage of record-low existing home supply much of the country, particularly in the Northeast and Midwest. For instance, today's report showed sales rose 30.2 percent in the Northeast; sales were up 17.9 in the Midwest.
Another remarkable finding is 247,000 homes have been sold pre-construction by homebuilders nationwide, another 10-year high and yet another sign that construction-related labor is in strong demand.
"There is solid growth in the number of sales contracts signed before construction has begun, a strong indicator that new single-family home production should continue to grow as we look ahead to 2018," said NAHB Chief Economist Robert Dietz.
The inventory of new homes for sale was 282,000 in October, which is a 4.9-month supply at the current sales pace. That is a significant crop from the 5.5 month supply of inventory reported last month.
After the Northeast and Midwest markets, the West region showed a 6.4 percent increase in sales, while the South lagged behind at just 1.3 percent.