construction crew in building looking at paperwork

Sales were down 5.6% month-to-month, but they’re up 17.7% year-to-year and up 4.6% so far in 2023. About 30% of all Oct. home sales were new construction.

WASHINGTON – Sales of newly built, single-family homes in October fell 5.6% compared to September, to a 679,000 seasonally adjusted annual rate, after “a notable downward revision in September.”

However, the pace of new home sales in October was up 17.7% year-to-year, according to the monthly data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

According to the National Association of Home Builders (NAHB), higher mortgage rates that averaged 7.62% per Freddie Mac, the highest rate since 2000, depressed buyer demand and pushed down October’s sales.

NAHB Chairman Alicia Huey, noting the interest rates, says new-home sales are not only up year-to-year, they’re also up 4.6% in 2023 so far “due to a lack of inventory in the resale market.”

“Median new home prices have moved lower as new home size has decreased in 2023,” says NAHB Chief Economist Robert Dietz. “Combined with sales incentives and a lack of resale inventory, demand has remained solid in 2023 and should improve in 2024 as interest rates move lower.”

A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the October reading of 679,000 units is the number of homes that would sell if this pace continued for the next 12 months.

New single-family home inventory in October increased to the highest level since January, up 8.3% from the previous month, to 439,000 – a 7.8-month supply at the current building pace. A measure near a 6-month supply is considered balanced.

Of total inventory available to buyers, which includes new and existing homes, newly-built homes made up 30% of all single-family homes available for sale in October. Historically, new homes make up only 12%.

The median new-home sale price in October was $409,300, down 3.1% from September, and down 17.6% year-to-year. Part of that drop is due to builder incentive use, though some stems from a trend to build smaller homes.

According to NAHB, 33% of October sales were priced between $300,000 and $400,000; a year earlier, only 20% of sales were in that range.

Regionally, on a year-to-date basis, new home sales were up 9.5% in the Northeast, 5.8% in the South and 2.5% in the West. In the Midwest, however, sales were down 0.3%.

© 2023 Florida Realtors®

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Author: kerrys