New home sales plummet 17% to 2-year low as rising mortgage rates sideline buyers
Sales of new US single-family homes dropped to the lowest level in nearly two years in October, likely as a rise in mortgage rates drove buyers to the sidelines and hurricanes disrupted activity.New home sales plunged 17.3% to a seasonally adjusted annual rate of 610,000 units last month, the lowest level since December 2022, the Commerce Department’s Census Bureau said on Tuesday.The sales pace for September was unrevised at a rate of 738,000 units.Economists polled by Reuters had forecast new home sales, which account for about 15% of US home sales, would ease to a pace of 725,000 units.
New home sales are counted at the signing of a contract, and can be volatile on a month-to-month basis.They dropped 9.4% year-on-year in October.Mortgage rates have reversed all of the decline that had pushed them to more than a 1-1/2-year low of 6.08% at the end of September after Federal Reserve began cutting interest rates.The average rate on a 30-year fixed-rate mortgage jumped to 6.72% by the end of October, tracking a rise in the 10-year Treasury yields, which have increased on strong domestic data that have suggested a slower path of rate cuts from the central bank.Expectations of fewer rate cuts next year have also been strengthened by fears of a resurgence in inflation.
President-elect Donald Trump said on Monday he would impose a 25% tariff on all products from Mexico and Canada, and an additional 10% tariff on goods from China, on his first day in office.The 30-year fixed-rate mortgage averaged 6.84% last week.New home sales tumbled 27.7% in the densely populated South, likely as hurricanes disrupted activity.They dropped 9.0% in the West, but rose 1.4% in the Midwest and soared 53.3% in the Northeast.The median new house price increased 4.7% to $437,300 in October from a year earlier.
The inventory of new homes increased to 481,000, the highest level since early 2008, from 471, 000 units in September.At October’s sales pace it would take 9.5 ...