New home sales in the United States decelerated in October, according to government data released Monday, although the market for new properties remains boosted by a lack of inventory for existing ones.
Sales of new single-family houses logged a lower than expected annual rate of 679,000 last month, seasonally adjusted, said the Commerce Department.
This marked a cooling from September’s pace of 719,000, which was revised lower.
The median sales price of new houses edged down to $409,300 as well — the lowest since August 2021.
With mortgage rates elevated after the Federal Reserve rapidly lifted the benchmark lending rate to fight inflation, homeowners have been reluctant to put their real estate on sale — having locked in lower rates previously.
The resulting lack of supply for existing homes has nudged more buyers into the market for new houses instead, even as they grapple with affordability.
Sales of existing homes form the majority in the US market.
Compared with the same month a year ago, October’s new home sales figure is 17.7 percent higher.
“The selling pace weakened to start the fourth quarter; the October 679,000 level of sales is down from 703,000 on average in the third quarter,” said economist Rubeela Farooqi of High Frequency Economics.
“Mortgage rates have eased in recent weeks but they remain elevated and are impacting affordability,” she said.
Data from home loan finance company Freddie Mac shows that the popular 30-year fixed-rate mortgage averaged 7.3 percent as of November 22, slightly lower than before but still more than twice the level two years ago.
For now, Freddie Mac has noted that potential homebuyers are still holding out for lower rates and more inventory.
