After posting a strong September, the number of newly-built homes sold nationwide slipped in October.
Total units sold on an annual basis dropped by 25,000 from September; supplies of new homes climbed 0.7 months. Home supply is back to its rolling, 6-month average of 8.6 months.
Like everything else in real estate, however, the October’s New Home Sales results varied by location.
For example, except for the South, each U.S. region posted a loss. In the South, there was a 3 percent gain. This is statistically significant because more new homes are sold in the South than in all other U.S. regions combined.
In October, the South accounted for 58 percent of all homes sold.
The dip in New Home Sales did not surprise Wall Street. New Home Sales is closely correlated to Housing Starts, and Housing Starts fell in July and August. Furthermore, it seems home builders expected the dip and are brushing it off.
In a poll taken 2 weeks ago, builders reported higher confidence in housing, and their respective prospects for the future. Home builder confidence is at its highest point since June.
For buyers in Manhattan , the effects of New Home Sales data are unknown. In a normal environment, falling sales volume and rising home supplies would help shift negotiation leverage away from the seller and toward the buyer, resulting in lower sales prices.
However, in this market, the “sellers” (i.e. home builders) are more confident about housing, and that offsets a buyer’s statistical edge.
With home prices stagnant and mortgage rates rising, therefore, the best “deals” may come between now and the New Year.
