Sales of new single-family homes increased 1.3% in October to an annual rate of 307,000, with gains in sales recorded in the Midwest (+22.2%) and West (+14.9%). Sales of new single family homes in the Northeast held steady and declined 9.5% in the South. The level of new single-family home sales during October remains close to the record low of 278,000 registered in August 2010 (see Chart 1). Nevertheless, there are many positives to note in the October new home sales report.
First, supply of new unsold homes in the marketplace at 6.3-month supply is very close to the historical average of 6.2-month mark (see Chart 2). This aspect is a big plus for prices of homes in a buyers market.
Second, the median price of a new single-family home in October was $212,300, up 4.00% from a year ago. Although a clear upward trend is not in place for prices of new homes, they have moved up during five out of ten months of the year (year-to-year change).
Third, the median number of months to sell a completed new single-family home was 7.4-months in October, down from a peak of 14.4-months in March 2010 and 8.1-months in October 2010. Sales prospects for home builders are improving and could spur additional construction activity in the months ahead if the pace of hiring posts a strong momentum.