US new home sales tumble to two-year low in October
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 per cent 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 (Nov 26). 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 per cent 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 per cent year-on-year in October.
Mortgage rates have reversed all of the decline that had pushed them to more than a 1½-year low of 6.08 per cent 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 per cent by the end of October, tracking a rise in the 10-year US Treasury yields, which have increased on strong domestic data that have suggested a slower path of rate cuts from the US 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 per cent tariff on all products from Mexico and Canada, and an additional 10 per cent tariff on goods from China, on his first day in office.
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The 30-year fixed-rate mortgage averaged 6.84 per cent last week.
New home sales tumbled 27.7 per cent in the densely populated South, likely as hurricanes disrupted activity. They dropped 9.0 per cent in West, but rose 1.4 per cent in the Midwest and soared 53.3 per cent in the Northeast.
The median new house price increased 4.7 per cent to US$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.
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At October’s sales pace it would take 9.5 months to clear the supply of houses on the market, up from 7.7 months in September. REUTERS
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