New home sales in October were at a seasonally adjusted annual rate of 632,000, an increase of 7.5% compared with September but down 5.8% compared with October 2021, according to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
The median sales price of a new home sold in October was $493,000. The average sales price was $544,000.
As of the end of the month, there were roughly 470,000 new homes available for sale in the U.S. – about an 8.9-month supply at the current sales rate.
“Sales of new single‐family houses in October exceeded consensus expectations,” says Odeta Kushi, deputy chief economist for First American, in a statement.
However, Kushi notes that “the new-home sales figure does not incorporate cancellations, which have been rising, so this may overestimate of sales.”
“The median sales price of new homes sold in October 2022 was the highest in the history of the series at $493,000, which is up 15.4 percent year over year and 8.2 percent month over month,” Kushi says. “Median prices increased even though a quarter of builders are now cutting prices. The increase in new-home prices reflects a shift in the mix of homes being sold, with fewer homes sold at lower prices points, thus the median price escalated, as well as higher construction costs are being passed on to the consumer.”
“One year ago, 18 percent of new-home sales were priced below $300,000,” she says. “In October 2022, only 12 percent of new-home sales were priced below $300,000. Looking back to pre-pandemic levels in October 2019, it was 43 percent.”
“Builders are offering incentives from price cuts and rate buydowns to upgrades,” Kushi adds. ”This month’s higher new-home sales number indicates some demand elasticity in the market for new homes.”
“By stage of construction, the share of completed homes sold was 29 percent, up from 27 percent one year ago, but down compared with last month,” she says. “The share of homes ‘under construction’ sold declined compared with last month, while the share ‘not started’ jumped.”
“By stage of construction, the share of completed homes/read- to-occupy inventory in October was 13 percent, up from 9 percent one year ago, but still low compared with pre-pandemic levels,” Kushi says. “While the share of new-home inventory that is under construction or not started decreased compared with one year ago.”
“The October report surprised to the upside, but leading indicators – 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.”
Photo: Todd Kent