US New Home Sales Slide in October, But Expectations Remain Upbeat
**October Sales Dip, September Figures Revised**
New US single-family home sales fell slightly in October and sales for the prior month were revised lower, casting a faint shadow over one of the brighter spots in the US economy, Reuters reported on 28 November 2012.
Latest figures released by the US Commerce Department on Wednesday showed that new home sales edged down 0.3 per cent to a seasonally adjusted annual rate of 368,000 in October from the revised September rate of 369,000. The annual rate of new home sales in September was downwardly revised from the previously reported 389,000, which had represented a two-year high. The report also said that median price for a new home in October was $237,700, up 5.7 per cent from a year ago.
**Hurricane Sandy’s Impact**
Some analysts suggested that the decline in home sales in October might be partially due to the impact of Hurricane Sandy, which slammed into the US East Coast at the end of October. In the Northeast, which bore the brunt of the storm, new sales plunged 32.3 per cent to an annual rate of 21,000. According to the US Commerce Department, however, the storm did not affect data collection at all and its impact on sales was likely “minimal.”
New home sales in the South, the nation’s largest housing market, also fell 11.6 per cent to an annual rate of 176,000. On the other hand, new home sales in the Midwest surged up by 62.2 per cent to an annual rate of 60,000, and new home sales in the West rose 8.8 per cent to an annual rate of 111,000.
**Results Below Forecasts, But Up for Year**
The October results released on Wednesday were below analysts’ expectations. Economists surveyed by Reuters had forecast new home sales rising to 390,000 last month from the previously reported 389,000 September rate.
Despite the monthly decline and analysts’ disappointment, however, new home sales in the US were up more than 17 per cent from October 2011. Accordingly, the recent data did not change the view that the US housing market is in recovery mode.
!m[](/uploads/story/934/thumbs/pic1_inline.png)The general improvement in new-home sale this year follows other reports that show the US housing market is starting to recover more than five years after it experienced a bubble burst. Home prices are rising, sales are up, and builders are starting work on more new home projects. In terms of annual performance, economists forecast home construction to add to the US economic growth this year for the first time since 2005.
According to analysts, a significant factor in the rebound is that the excess supply of homes that were built during the housing boom has finally thinned out. At the same time, more people are looking to buy or rent a home after living with relatives or friends during and immediately after the bust. Mortgage rates have also been near record lows in 2012, making lending a more affordable home funding option.
