The Census Bureau and HUD reported October new home sales at a seasonally-adjusted annual level of 368,000, which is virtually the same as the three previous months. A 32% drop in sales in the Northeast was likely a result of the threat and ultimate impact of the storm named Sandy.
Inventories rose 2,000 to 147,000, which remains at a very low level but shows some promise that builders are able to begin restocking. The month’s supply was 4.8, well below an industry standard of 6 months.
Median home prices increased 5.7% and average prices rose 8% from October of last year. The rise is likely a dual effect of rising building costs and a continuation of a compositional effect. Recent home buyers are those that can obtain a mortgage and the tight credit standards are making it less likely for moderate income households to qualify while higher income households are able to make it through the more restrictive thresholds.
Regionally, sales were up in the Midwest and West both month-to-month as well as comparing the October level to the third quarter average, which adjusts for typical unusual monthly movements. Sales were down in the South to 176,000 but the August level was unusually high. The three-month moving average still stands at 184,000, which is within a 3% range of the monthly levels from April to August 2012. The Northeast fell 32% but the monthly level of 21,000 was well below the three-month moving average as far back as February 2012.
On an annual basis, October sales were up 17.2% from one year earlier and continue to support an expected 22% increase in annual sales for 2012 over 2011. New home sales will continue to rise at this modest pace as the pent up demand is released and as the policy uncertainties at the end of 2012 are resolved.