Sales of new single-family houses dipped slightly in October but is still 41.5% above October 2019’s estimate of 706,000, according to the U.S. Census Bureau and the Department of Housing and Urban Development. New-home sales last month were at a seasonally adjusted rate of 999,000, 0.3% lower than the revised September rate of 1,002,000.
The continued elevated new-home sales follows other strong residential market indicators for the month of October. Zonda reported this week that pending new-home sales were tracking higher year over year in nearly every top U.S. market. And existing home sales were up 26.6% from a year ago, according to the National Association of Realtors.
According to the data, the median sales price of new houses sold in October was $330,600, while the average sales price was $386,200.
The seasonally adjusted estimate for new homes for sale was 278,000 at the end of October, representing a 3.3-month supply at the current sales rate.
“Today’s report from the Census Bureau suggested that demand for new homes in October continued to be strong, but supply constraints will likely limit the growth of new-home sales going forward,” noted Fannie Mae chief economist Doug Duncan. “The monthly sales pace is now reported to have been essentially flat for the three months at an elevated level of about 1 million annualized units, a rate not seen since 2006. However, sales are increasingly being driven from homes not yet under construction. The share of homes sold but not yet started rose for the third straight month and now represents the highest share of total sales since 2005, while the number of fully completed homes sold hit the lowest level since the COVID-19-related shutdowns this past April.”
Duncan added that the sales pace continued to exceed its typical relationship with the rate of construction. “At the comparatively low level of started homes available for sale, we believe the current sales pace to be unsustainable. We continue to project a convergence in coming months via a softening of sales while housing starts show comparative strength,” he said. “However, due to the revisions to past months’ numbers and third quarter sales coming in stronger than previously thought, our fourth quarter forecasts for both new sales and new housing starts will likely be revised upward.”