Census and HUD reported new homes sales for October rebounded from their unexpected low in September to a level of 495,000 on an annual basis. This is a 10.7% increase from the revised September, a 1.6% increase from the third quarter average and a 15.7% increase in year-to-date not seasonally adjusted levels from last year. Regionally, only the West experienced an insignificant decline of 0.9%.
Inventory also increased 1.3% to 226,000, the highest level since March 2010. At the current sales pace, the inventory would be sold off in 5.5 months. The increase was particularly strong in homes not yet started now at their highest since late 2008. The addition of inventory continues in the face of builders’ difficulty obtaining lots and labor. The increase in the inventory of not yet started homes is encouraging that builder are finding lots but may be waiting for a buyer before starting the home.
The median sales price fell almost 6% as sales in the $200,000 to $300,000 range picked up, which is likely an indication that first time buyers are returning to the market.
The sales pace is in line with NAHB’s forecast of 511,000 new home sales for 2015. The improving general economic conditions, rising employment and very affordable mortgage rates make this forecast possible.