Sales of newly built, single-family homes fell to a seasonally adjusted annual rate of 544,000 units in October after an upwardly revised September report, according to the latest data by the U.S. Department of Housing and Urban Development (HUD) and the U.S. Census Bureau.
This is the lowest sales pace since December 2016. However, on a year-to-date basis, sales are up 2.8 percent from this time in 2017, the report said.
New-home sales dropped 8.9 percent in October as affordability challenges persist, according to the report.
“The November reading is consistent with reports from our builders, who say that the job market and demographic tailwinds bode well for housing demand but rising interest rates and home prices are forcing customers to take a pause,” Randy Noel, chairman of the National Association of Home Builders (NAHB), said in response to the report.
Noel also suggested that policymakers should see this drop in sales as an indicator that housing affordability will continue to slow down the market.
“Home sales declined this month as housing affordability continues to be a hurdle for consumers,” NAHB Senior Economist Danushka Nanayakkara-Skillington said. “While a solid economy and positive demographics support future demand for housing, it is critical to address this mounting affordability crisis.”
The inventory of new homes for sale rose to 336,000 in October. The median sales price fell 3.6 percent to $309,700, as the market is shifting to townhomes and other lower-cost houses.
On a year-to-date basis, new-home sales rose 6.3 percent in the Midwest, 4.1 percent in the West, and 3.8 percent in the South. Home sales fell 17.1 percent in the Northeast year-to-date.