In the face of a 16-day government shutdown, Americans were buying new homes at an incredible pace in October, according to the latest report from The Washington Post on Wednesday. New home sales rang in with their largest monthly gain in more than 33 years after a few months of softer sales.
Single Home Sales
The Census Bureau of the Commerce Department said that sales of single-family homes in October were at a seasonally adjusted annual rate of 444,000, up 25.4 percent from the revised September rate of 354,000. The leap in sales from September to October was the biggest since May 1980. Conversely, new home sales were down 6.6 percent in September, representing the slowest annual rate since April 2012. August and July figures underwent downward revisions to 379,000 and 373,000, respectively. Both the September and October reports were delayed because of the government shutdown.
Economists expected the October rate to equal a 428,000-unit pace.
Compared to October 2012 (365,000 annualized rate), new home sales were ahead by 21.6 percent.
Lower Inventories
The report showed that there is 4.9-months worth of inventory on the market at the current sales pace. That’s down from a 6.4-month supply in September and marks the lowest inventory rate since June (4.3 months). Economists generally consider a 6-month supply as a firm balance of supply and demand.
The median sales price for houses sold in October was $245,800, which was down 4.5 percent from September and 0.6 percent from October 2012. The average sales price was $321,700.
The Recovery Inches On
It’s an optimistic sign to see new home sales rebound so sharply, especially in light of the wrangling in Washington that was (and still is) going on. Sales for the month should also be taken with a wider view of the housing market on the whole to not skew perception based upon relatively weaker months prior. The sale of existing homes dropped by 3.2 percent in October to a seasonally adjusted 5.12 million annual pace, according to the National Association of Realtors. Sales of existing single-family homes, the largest component, decreased by 4.1 percent during the month. The median price for existing homes rose substantially compared to a year earlier, though, up 12.8 percent to $199,500, representing the eleventh consecutive month of double-digit gains in value.
Although still far from peaks, the big picture is that the housing market is still proving its resiliency to lead the country back from the recession (that, incidentally, it played a big role in creating). Interest rates have risen, but are still near historic lows, giving the industry reason to try and continue to trudge steadily upward going forward, in spite of some monthly fluctuations.
