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U.S. New Home Sales Dip 0.3% In October, September Rate Revised Sharply Lower

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New home sales in the U.S. unexpectedly showed a modest decrease in the month of October, according to a report released by the Commerce Department on Wednesday, with the report also showing a substantial downward revision to the data for September.

The report said new home sales edged down 0.3 percent to a seasonally adjusted annual rate of 368,000 in October from the revised September rate of 369,000.

The annual rate of new home sales in September was downwardly revised from the previously reported 389,000, which had represented a two-year high.

Economists had been expecting new home sales to inch up to 390,000 from the 389,000 originally reported for the previous month.

Noting that new home sales remain 73 percent below the "bubblicious" peak in July of 2005, Peter Boockvar, managing director at Miller Tabak, said, "We've bottomed in housing and have bounced off that bottom but perspective must be in order considering how far we fell."

"On one hand, there is plenty of room for continued improvement but on the other, the healing process will take a lot of time and will likely be in fits and starts as recoveries from the aftermath of bubbles typically are," he added.

The modest monthly drop in new home sales in October was partly due to weakness in the Northeast, which saw new home sales tumble 32.3 percent to an annual rate of 21,000.

New home sales in the South, the nation's largest housing market, also fell 11.6 percent to an annual rate of 176,000.

On the other hand, new home sales in the Midwest surged up by 62.2 percent to an annual rate of 60,000, and new home sales in the West rose 8.8 percent to an annual rate of 111,000.

The report also showed that the median price of new homes sold in October was $237,700, down 4.2 percent from $248,000 in September but up 5.7 percent from $224,800 in October of 2011.

Additionally, the Commerce Department said there were 147,000 new homes for sale at the end of October, down from 145,000 in the previous month.

The number of new homes for sale represents 4.8 months of supply at the current sales rate, up from 4.7 months of supply in September.

Last Monday, the National Association of Realtors released a report showing an unexpected increase in existing home sales in the month of October, with the increase in sales coming in spite of some regional impact from Hurricane Sandy.

NAR said existing home sales rose 2.1 percent to a seasonally adjusted annual rate of 4.79 million in October from a downwardly revised 4.69 million in September.

Economists had expected existing home sales to fall to 4.70 million from the 4.75 million originally reported for the previous month.

Thursday morning, NAR is scheduled to release a separate report on pending home sales in the month of October. A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

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