New data from the U.S. Census Bureau and the Department of Housing and Urban Development shows that new single-family home sales in October dipped, reaching a seasonally adjusted annual rate of 679,000. While this figure reflects a 5.6% decline compared to the revised September rate of 719,000, it marks a robust 17.7% increase when compared to October 2022's estimate of 577,000.
The data also revealed that the median sales price for new houses sold in October 2023 stood at $409,300, with an average sales price of $487,000. These figures indicate a range of pricing options for prospective homebuyers in the new home market.
Looking at the inventory of new houses available for sale, the seasonally adjusted estimate for October shows 439,000 homes on the market. With a current sales rate, this represents a supply of 7.8 months.
Existing home sales also slowed in October, falling to their lowest level in more than a decade amid higher mortgage rates. Home sales in October slowed 4.1% to a seasonally adjusted annual rate of 3.79 million, the National Association of Realtors reported last week.
The pace of existing home sales was down 14.6% from the year before.
"Historically, the median sale price of a new home has been higher than that of an existing home, but that spread has steadily declined this year as the ‘rare and elusive’ existing home for sale just keeps getting more expensive. A new home provides a good alternative," First American Economist Ksenia Potapov said.
But can builders keep up?
“Builders are benefitting from the lack of resale inventory, but to relieve the supply pressure they need to deliver homes that are completed and ready to occupy. In November, 17% of the total new-home inventory for sale was completed, down from more than 20% pre-pandemic," Potapov said.
Also when it comes to affordability, many younger generations of would-be-first-time-homebuyers are left in the cold.
“Entry-level supply remains especially limited, even as millennials continue to age into their prime home-buying years. This month, 15% of new-home sales were priced below $300,000, up from 13% one year ago," Potapov said. “The housing market remains underbuilt relative to demand, so the lesson seems to be that if you build it – and perhaps buy down the rate – buyers will buy it."
