Purchases of new homes unexpectedly advanced in broad fashion last month, reaching the strongest pace in a decade and offering an encouraging signal for residential construction, according to government data released Monday.
Single-family home sales rose 6.2% month-to-month to a 685,000 annualized pace (the estimate 627,000), the highest since October 2007, a revised 645,000 rate. Purchases in the South increased for a third month, to the fastest pace in 10 years. The median sales price increased 3.3% year-to-year to $312,800. The supply of homes at the current sales rate fell to 4.9 months, the smallest since July 2016, from 5.2 months; 282,000 new houses were on market at end of October.
The report showed the South continued to recover from a pair of hurricanes. Purchases in other areas of the country, including a 17.9% surge in the Midwest, also climbed.
The number of properties sold in which construction hadn't yet started reached the highest level since January 2007, signaling residential construction will accelerate in coming months.
A steady job market and low mortgage costs are helping propel demand for real estate and pushing up property prices. At the same time, it's a hurdle for some prospective buyers, especially younger Americans and those entering the market for the first time. The average selling price in October reached a record high $400,200, probably reflecting construction of higher-end homes.
New-home sales, tabulated when contracts get signed, account for about 10% of the market. They're considered a timelier barometer than purchases of previously owned homes, which are calculated when contracts close and are reported by the National Association of Realtors.
The number of homes sold but not yet started rose to 247,000 in October from 184,000; another 221,000 dwellings sold were already under construction. The Commerce Department said there was 90% confidence that the change in sales last month ranged from an 11.8% drop to a 24.2% increase, underscoring the volatility of the data. The report was released jointly by the Census Bureau and Department of Housing and Urban Development.