Buyers Flock to New Homes
Sales of new homes in October were much stronger than expected and rose to record rates, signaling that consumers might be rushing to buy homes before mortgage rates get too high.
The U.S. Department of Commerce said Tuesday that sales of new homes in October rose 13% from the September annualized rate. The seasonally adjusted annual rate for October was 1.42 million, topping July's record of 1.37 million and surpassing September's revised rate of 1.26 million. The October pace was 9% above the rate from a year earlier.
Economists were expecting new-home sales to drop to a 1.2 million rate in October, according to Reuters. The 13% rise in the sales rate was the highest monthly jump since 1993, according to Wachovia research.
Sales prices also remained strong. The median sales price of new homes sold in October rose to $231,300 from $229,200 a year ago. The revised September median sales number was $227,700.On the inventory side, the total level of homes for sale increased slightly, while the monthly supply rate dropped due to the increased sales pace. The seasonally adjusted estimate of new houses for sale at the end of October was 496,000, which represents 4.3 months of supply at the current sales rate. This was a drop from the 4.7 months of supply at the end of September, when an estimated 490,000 new homes were for sale. Industry watchers said the strong new-home sales point to consumers looking to buy a home before mortgage rates rise further after more expected rate hikes by the Federal Reserve. "I think part of it is some fence sitters jumping in the market here," says Nick Buss, senior vice president with PNC Real Estate Finance, which provides financing to homebuilders. "I think everyone agrees the sub-6% (mortgage) rate is probably gone for a while."
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV