New-Home Sales Set Another Record

New single-family home sales jumped 13% in October to a new monthly record, but there are signs that demand is softening along with prices of newly constructed homes.The U.S. Census Bureau reported that new-home sales rose to a seasonally adjusted annual rate of 1.42 million in October, up from 1.26 million in September. Despite the October sales report, National City Corp. chief economist Richard DeKaser said, "we are seeing a market that is at a turning point." He noted that the median price of new homes is up only 0.9% this year, compared with 18.0% in 2004. "We are seeing price softening, which is not something one typically observes during a period of extraordinarily robust demand," Mr. DeKaser said. He also observed that interest rates may have prompted some prospective homebuyers or "fence-sitters" to sign a sales contract. During October, the 30-year mortgage rate moved above 6% for the first time since March.