Adding to the string of good news from the home building industry this month, new-home sales reported gains in October, according to data released today by the U.S. Census Bureau and the Department of Housing and Urban Development. Nationwide, sales of new homes were up 1.3% on a monthly basis and up 8.9% year-over-year, reaching an annual rate of 307,000, according to the report.
The good news was mitigated, however, by the disclaimer that the estimate was not statistically significant, leaving things uncertain as to whether the numbers actually went up or down. And new-home sales are still on track to make 2011 the worst year on record (tracking of data began in 1963).
For a more reliable picture of the numbers, Patrick Newport, U.S. economist at IHS Global Insight, recommends looking at the three-month moving average, which "shows new home sales stuck at the bottom nationally and in all four regions," he says. Newport also points to October’s state permits numbers, released today by the Census, which include annual data showing permits stuck near the bottom everywhere but Alaska and North Dakota. The bottom line for the housing industry, he says, is that "conditions in the market for single-family homes are really bad."
Should October’s rise in sales prove accurate, the gains will have come at the cost of prices. Both median and average new-home sales prices were down on a monthly basis, with the median down $1,000 from September to $212,300 and the average down 2.5% to $242,300. On an annual basis, the average price was down 4.8%, but the median price was up 4.0%, a disparity David Goldberg, home building economist at New York-based UBS, attributes to skewed numbers due to last year’s tax credit, which pulled sales toward the first part of the year. A shift in demographics also contributed, with a larger percentage of sales now coming from the West while the South’s percentage is shrinking.
Sales were up in the Midwest and West, by 22.2% and 14.9%, respectively, compared to September. Year-over-year, the Midwest was up 37.5%, and the West was up 54.0%. The South was down on both a monthly and yearly basis, 9.5% and 5.6%, respectively. The Northeast was flat on a monthly basis and down 26.7% annually.
By sales price, home costing less than $150,000 gained market share, jumping from 16% of sales in September to 24% in October. Other price categories fell slightly with the exception of a slight uptick at the high end of the market, with homes priced at more than $750,000 growing from 1% to 2% of sales.
The number of new homes for sale stayed flat at 162,000, while completed homes for sale dropped by 1,000 to 60,000. Total new-home inventory inched down slightly to a 6.3-month supply.
Claire Easley is a senior editor at Builder.
Learn more about markets featured in this article: Greenville, SC.