New-home sales rebound in October
Sales of new homes recovered in October after suffering a steep drop in September, indicating a return to stability in the housing market.
The Commerce Department says new-home sales climbed 10.7% last month to a seasonally adjusted annual rate of 495,000. This rebound followed a 12.9% plunge in the sales rate during September.
Americans recovered much of their appetite for owning new homes this year. Purchases have surged 15.7% year-to-date, benefiting from the solid hiring gains and low mortgage rates.
The new-home sales report tends to be volatile from month to month. Home-buying surged 135.5% in the Northeast in October, while rising less aggressively in the Midwest and South. Sales dropped slightly in the West.
But prices dipped last month despite other industry reports indicating that real estate prices have eclipsed income growth. In October, the median new-home sales price fell 8.5% from a year ago to $281,500.
The real estate sector is still healing from the bursting of the housing bubble and the 2008 financial crisis. Sales of new homes remain below the 52-year historic average of 655,200.
There are other signs that the sales gains of the past year are levelling off. Sales of existing homes began to slow last month, a sign that rising prices are creating affordability problems for many would-be buyers.
The National Association of Realtors said Monday that sales of existing homes fell 3.4% in October to a seasonally adjusted annual rate of 5.36 million.
Despite that monthly decline, existing- home purchases have increased 3.9% from a year ago. The sales improved even though potential buyers face slim picking as the number of listings on the market has dropped 4.5%.
Low mortgage rates have eased some home sales. But rates have started to rise ahead of a December Federal Reserve meeting, where Fed officials are expected to raise short-term rates for the first time in nearly a decade.
The average, 30-year fixed mortgage rate was slightly under 4% this week, compared to 3.79% a month ago, according to mortgage buyer Freddie Mac.
