The numbers: U.S. new-home sales fell 5.6% to a seasonally adjusted annual rate of 679,000 in October, from a revised 719,000 in September, the government reported Monday.
Analysts polled by the Wall Street Journal had forecast new-home sales to occur at a seasonally adjusted annual rate of 725,000 in October.
The data are often revised sharply. Sales in September were initially reported at 759,000.
Key details: The median sales price of new houses sold in October dropped to $409,300, down from $422,300 in the prior month and down 17.6% from the same month last year. That’s the lowest level since August 2021.
The supply of new homes for sale rose by 1.4% between September and October, equating to a 7.8-month supply. That’s up from a 7.2-month supply in the prior month.
Big picture: New-home sales have been volatile but generally trending higher since last summer. Economists are starting to talk about a possible inflection point but are cautious about reading too much into the data, because October was when the average rate for a 30-year fixed mortgage rose to almost 8% before falling sharply in recent weeks.
The drop in prices showed home builders are responding quickly to bring down costs for potential buyers. Owners of existing homes aren’t as interested in responding to the dropping prices.
What are they saying? “We expect new-home sales to soften further over the remainder of the year, but with mortgage rates recently pulling back somewhat, we don’t expect the decline to be large,” said Doug Duncan, chief economist at Fannie Mae.
Market reaction: Stocks
DJIA
SPX
were slightly lower on Monday, while the 10-year Treasury yield
BX:TMUBMUSD10Y
was down slightly to 4.41%.
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