Data released by the U.S. Census Bureau and the Department of Housing and Urban Development (HUD) Thursday morning shows that new-home sales bounced back in October-thanks to a generous adjustment to September's data to show a pace of just 716,000. The figure originally reported last month was much higher at 770,000. Sales of new single-family houses in October were at a seasonally adjusted annual rate of 728,000. This is 1.7 percent above the revised September rate and is 23.5 percent below the October 2006 rate of 952,000.
The revision of September's figures left one analyst skeptical. Carl Reichardt, a Wachovia Capital Markets senior equity research analyst, said in a note that he believes "one month of new-home sales data does not make a trend, as these data are volatile and often revised."
The report also revealed that the median sales price of new houses sold in October was $217,800 and the average sales price was $305,800. The seasonally adjusted estimate of new houses for sale at the end of October was 516,000. This represents a supply of 8.5 months at the current sales rate. Regionally, sales increased in three parts of the country with the Midwest up 14.2 percent, the South up 6.8 percent, and the Northeast up 1.8 percent. Sales fell 15.7 percent in the West.
According to Patrick Newport, an economist with Global Insight, a Massachusetts-based economic and financial analysis firm, October's numbers are leaving analysts "either scratching their heads trying to make sense of October's numbers, or they are waving them off."
Newport, in an analyst note, says that one of the reasons why this report should be questioned is that it does not account for cancellations.
"Cancellations distort the new-home sales numbers because the Census Bureau does not revise its recent estimates to account for them," Newport wrote. "Because of cancellations, which have accelerated recently [and are not accounted for in the data], the current level of new-home sales [appears] too high, and the inventory of unsold homes [appears] too low."