Sales of new single-family homes declined slightly in October after rising to the fastest pace since November 2006 in the prior month. Total sales fell 0.3 percent in October to a 999,000 seasonally adjusted annual rate. Sales are still up an astonishing 41.5 percent from a year ago (see top chart).
Sales fell in two of the four regions tallied: sales fell 2.0 percent in the South – the largest region by sales volume – leaving sales 40.1 percent above year-ago levels while sales declined 1.5 percent in the West, leaving that region’s sales rate 35.9 percent above the year-ago pace. However, sales were up 5.1 percent in the Northeast and were 86.4 percent above the year-ago level while sales were up 11.2 percent in the Midwest and 51.4 percent above year-ago levels.
Total inventory of new single-family homes for sale was unchanged at 278,000 in October, leaving the months’ supply (inventory times 12 divided by the annual selling rate) at 3.3, unchanged from September but 40.0 percent below the year-ago level (see bottom chart).While the months’ supply was unchanged, the median time on the market for a new home declined to 3.3 months from 4.6 in September (see bottom chart).
Though unemployment remains high and the outlook for the labor market and the broader economy remains highly uncertain, near record-low mortgage rates and surging demand for less dense living areas are supporting a strong recovery for the housing market. Only time will tell if these conditions will continue, but for now the housing market remains one of the brightest areas of the economy.