Sales of newly built, single-family homes in October dipped 0.3 percent to 999,000 from an upwardly revised September number, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. Despite the monthly decline, the October rate is 41.5 percent higher than the October 2019 pace, and on a year-to-date basis, new home sales are up 20.6 percent in 2020.
“Buyer traffic remained strong in October even as the country’s attention was focused on the elections and policy issues going into 2021,” said NAHB Chairman Chuck Fowke, a custom home builder from Tampa, Fla. “Mortgage rates remain low and builder confidence is at an all-time high, indicating that demand remains steady and sales will remain solid.”
“NAHB analysis showed that the gap between construction and sales was at an all-time high in early fall. Thus, the NAHB forecast contains an acceleration in single-family starts and some slowing of the pace of growth for new homes sale to allow a catch-up,” said NAHB Chief Economist Robert Dietz. “Demand remains strong as homebuyers seek out lower density markets as part of the suburban shift.”
A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the October reading of 999,000 units is the number of homes that would sell if this pace continued for the next 12 months.
Inventory remains tight at a 3.3 months' supply, with 278,000 new single-family homes for sale, 13.4 percent lower than October 2019. This is the fourth consecutive month with inventory running under four months’ supply. Of the inventory total, just 44,000 are completed, ready to occupy. These inventory numbers point to additional construction gains ahead, as indicated by record levels of the NAHB/Wells Fargo Housing Market Index.
The median sales price was $330,600. The median price of a new home sale a year earlier was $322,400.
Regionally, on a year-to-date basis new home sales were up in all four regions: 29.9 percent in the Northeast, 29.8 percent in the Midwest, 18.5 percent in the South, and 20.1 percent in the West.