The National Association of Home Builders (NAHB) says that sales of newly built, single-family homes in October fell 5.6 percent to a 679,000 seasonally adjusted annual rate, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The pace of new home sales in October was up 17.7 percent from a year ago.
“New home sales fell back in October as interest rates moved higher,” said Alicia Huey, chairman of the NAHB. “Despite the challenging conditions, sales are up 4.6 percent on a year-to-date basis 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,” said Robert Dietz, chief economist for NAHB. “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 percent from the previous month, to 439,000. This represents a 7.8 months’ supply at the current building pace. A measure near a 6 months’ supply is considered balanced. Of total inventory, including new and existing homes, newly-built homes made up 30 percent of all single-family homes available for sale in October – compared to a 12 percent historical average.