New home sales sank in October as mortgage rates priced potential buyers out of the market, according to newly released data from the U.S. Census Bureau and the Department of Housing and Urban Development.
Sales fell by 5.6% from September to a seasonally adjusted annual rate of 679,000, below the rate of 730,000 units predicted by economists.
New home sales are up 17.7% year-over-year, however, as lack of existing inventory pushes buyers to new construction. There were 439,000 new homes for sale at the end of October, representing a 7.8-month supply at the current sales rate.
The median sales price of new houses sold in October 2023 was $409,300, while the average sales price was $487,000, both down by more than $10k.
The slip from September’s rally is bad but predictable news.
The end of the year, and the ringing in of holidays, tend to bring lower-volume months.
“While the overall number of potential homebuyers is down, ‘patience’ seems to be the mantra for those still in the market, and lenders would do well to follow suit, as industry analysts have revised their forecasts to reflect a tough Q4 and Q1,” Patrick O’Brien, CEO of LenderLogix, noted.
LenderLogix’s Q3 2023 Homebuyer Intelligence Report found significantly fewer shoppers on the market compared to Q2 as prices and rates soared.
Existing home sales were also down in October, slipping by 4.1% in October to a seasonally adjusted annual rate of 3.79 million. Sales slumped 14.6% from one year ago.
Prices for these homes were also down month-over-month, from $407,100 to $391,800, though they were up 3.4% YOY.
“Prospective home buyers experienced another difficult month due to the persistent lack of housing inventory and the highest mortgage rates in a generation,” NAR Chief Economist Lawrence Yun said. “Multiple offers, however, are still occurring, especially on starter and mid-priced homes, even as price concessions are happening in the upper end of the market.”
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