New home sales were at a seasonally adjusted annual rate of about 544,000 in October, a decrease of 8.9% compared with a revised 597,000 in September and a decrease of 12.0% compared with 618,000 in October 2017, according to estimates from the U.S. Census Bureau and U.S. Department of Housing and Urban Development.
The drop follows a month-over-month decrease of 5.5% in September.
As was the case in September, new home sales saw the biggest drop in the Northeast, where they were down 17.1% compared with October 2017.
That drop was enough to offset annual increases of 6.3% in the Midwest, 4.1% in the West and 3.8% in the South.
The median sales price of a new home sold in October was $309,700.
The average sales price was $395,000.
As of the end of October there were about 336,000 new homes available for sale in the U.S., about a 7.4-months supply at the current sales rate.
Randy Noel, chairman of the National Association of Home Builders (NAHB), says despite pent-up demand, rising interest rates and home prices are “forcing customers to take a pause.”
“Policymakers should see this drop in sales as an indicator that housing affordability will continue to slow down the market,” Noel says in a statement.
Danushka Nanayakkara-Skillington, senior economist for NAHB, says “housing affordability continues to be a hurdle for consumers.”
“While a solid economy and positive demographics support future demand for housing, it is critical to address this mounting affordability crisis,” she says.