New home sales increased 0.4% in October compared with September but were down 23% compared with October 2020, according to estimates from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
New home sales were at a seasonally adjusted annual rate of 745,000, as of the end of October, up from a rate of 742,000 in September.
The median sales price of a new home sold in October was $407,700. The average sales price was $477,800.
As of the end of October, there were about 389,000 new homes available for sale in the U.S.- about a 6.3-month supply at the current sales rate.
In a statement, Odeta Kushi, deputy chief economist for First American, points out that the median sales price of $407,700 is “17.5% higher than one year ago and a new record high.”
“By stage of construction, the share of completed homes/ready-to-occupy inventory in October was 9.8 percent, down from 15.1 percent one year ago,” Kushi says. “While the share of new-home inventory that is not started increased from 21 percent to 28 percent.
“While inventory increased in October, what’s behind the rising share of homes that have not started construction? Builders face supply-side challenges, including building material supply-chain bottlenecks and difficulty in finding skilled labor that make it hard to start building,” Kushi says.
The steep rise in home prices has resulted in “affordability challenges” that could persist for some time.
“The outlook for new-home sales is largely dependent on the amount of new construction being built and the demand for new homes,” Kushi says. “Demand remains strong, as millennials continue to age into their prime home-buying years, rates remain low, and the economy improves.”
“The lack of existing homes for sale to meet this growing demand nationwide is supportive of new construction,” she adds. “Yet, as we know, builders are facing supply-side headwinds that make it more difficult and costly to build.”
Photo: Todd Kent