New Home Sales Record Broken

U.S. consumers bought new homes in October at a record level, painting a picture of a robust economy and confounding many who expected more subdued home sales in the wake of recent interest rate rises.

The Commerce Department said the number of new single-family homes sold in October rose by 16.3% to an all-time record seasonally adjusted annual pace of 986,000 units after a weak September when sales ran at an 848,000 unit pace, initially reported as 811,000.

Economists had forecast a sales pace of 858,000, with many expecting the data to reveal stronger new home sales in October only because September’s data showed such a steep decline, partly due to Hurricane Floyd.

Separately, the Labor Department said that first-time unemployment insurance benefits rose by 15,000 to 291,000 in the week. A reading of less than 300,000 is seen as an indication of a strong job market.

The home sales data seemed at odds with a report released Monday that showed sales of existing homes slowed in October for the fourth month in a row.

Economists took that data as a sign the housing market was slowing after recent interest rate hikes, which have sent 30-year mortgages to near 8%. Even when data from October and September are averaged, amounting to a sales pace of 917,000 units, the new homes market still appears unusually robust.

Sales in the West rose 18.1%, while Midwest sales surged 40.4% and sales in the South grew 10.3%. Northeast sales slowed 11%.

The median home price dipped to $159,000 in October from $159,900 in the previous month.