According to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, newly built single-family home sales dropped to a seasonally adjusted rate of 544,000 in October. The National Association of Home Builders (NAHB) reports this is the lowest sales pace since December 2016. Even so, sales are up 2.8 percent from this time last year.

“The November reading is consistent with reports from our builders, who say that the job market and demographic tailwinds bode well for housing demand but rising interest rates and home prices are forcing customers to take a pause,” says Randy Noel, chairman of the NAHB. “Policymakers should see this drop in sales as an indicator that housing affordability will continue to slow down the market.”

A new home sale occurs when a sales contract is signed or a deposit is accepted, and the home can be in any stage of construction: not yet started, under construction or completed. The October reading of 544,000 units is the number of homes that would sell if conditions remained the same for the next 12 months.

“Home sales declined this month as housing affordability continues to be a hurdle for consumers,” says NAHB senior economist Danushka Nanayakkara-Skillington. “While a solid economy and positive demographics support future demand for housing, it is critical to address this mounting affordability crisis.”

The inventory of new homes rose to 336,000 units in October, while the median sales price fell 3.6 percent to $309,700. The NAHB reports this is due to the market shifting toward townhomes and other lower-cost houses.

On a year-to-date basis, new home sales rose 6.3 percent in the Midwest, 4.1 percent in the West, and 3.8 percent in the South. They dropped 17.1 percent in the Northeast.

Leave a Reply

Your email address will not be published. Required fields are marked *