Today’s Commerce Department report on home sales included combined October and September data after the figures were delayed due to the government shutdown. Purchases were down 6.6% in September from a 379,000 annualized pace in August that was weaker than the previously reported 421,000. The revisions and September data indicate the market took a bigger hit than previously estimated following the increase in mortgage rates.
The median sales price decreased 0.6% from October 2012 to $245,800, today’s report showed.
Purchases rebounded in all four U.S. regions in October, led by a 34% jump in the Midwest.
The supply of homes dropped to 4.9 months from 6.4 months in the September which was the highest since August 2011. There were 183,000 new houses on the market at the end of October, down from 190,000 the prior month that was the most since December 2010.
New-home sales, tabulated when contracts are signed, are considered a timelier barometer than purchases of previously owned dwellings, which are calculated when a contract closes. New construction accounted for about 7% of the residential market in 2012.
In one sign of growing momentum, applications for building permits reached a five-year high in October. Permit requests rose 6.2% to a 1.03 million annualized rate, the most since June 2008, after a September pace of 974,000, the Commerce Department reported last week.
The surge was paced by a jump in applications for apartments and condominiums, which increased 15.3% after a 20.1% gain in September.
The annual pace of existing home sales fell in October to 5.12 million, the lowest level in four months, with buyers constrained by a limited supply and higher mortgage rates, the Realtors group reported last month. There were 2.13 million previously owned homes for sale at the end of October, down from 2.17 million the month prior.
Builders see plenty of room for growth, said David G. Valiaveedan, vice president for finance at Hovnanian Enterprises Inc. based in Red Bank, New Jersey. At the market peak in 2005, builders began work on more than 2.2 million homes, compared with an average 907,000 annualized pace per month in 2013 through August. The industry “is way under-producing the long- term demand,” he said.
“The experience of the last cycle in terms of the depth and length of the recession in housing has been a lot different than previous cycles,” Valiaveedan said at a Nov. 14 conference. “We firmly believe we have a lot of runway ahead of us and a lot of opportunity.”