 | New Single-Family Home Sales Rose 0.7% in October |
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| Posted Under: Data Watch • Home Sales • Housing |
Implications: New single-family home sales rose 0.7% in October, coming in 1.8% higher than a year ago and, besides tying May, the highest level since mid-2008. This comes on the heels of last Thursday's report, which showed a solid gain in existing home sales. Nonetheless, new home sales still remain at depressed levels relative to where they should be by now in the recovery and we believe there are a few key reasons for this. First, the homeownership rate remains depressed as a larger share of the population is renting. Second, buyers have shifted slightly from single-family homes, which are counted in the new home sales data, to multi-family homes (think condos in cities), which are not counted in the report. Third, although we may be seeing a thaw, financing is still more difficult than it has been in the past. The inventory of new homes rose 2,000 in October, but still remains very low as the chart to the right shows. As a result, homebuilders still have plenty of room to increase both construction and inventories. The median sales price for a new home skyrocketed in October, up 16.5% in October and up 15.4% from a year ago. The gain is due to the "mix" of home sales in that particular month. Sales of homes over $750,000 made up 9% of sales in October, up from 3% last month, and 5% a year ago. Sales of homes over $750,000 made up 9% of sales in October, up from 3% last month, and 5% a year ago. In other news this morning, pending home sales, which are contracts on existing homes, declined 1.1% in October, but remain up 2.2% from a year ago, while the Chicago PMI, which measures manufacturing sentiment in that key region, declined to a still very high 60.8 in November from 66.2 in October.
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