Federal government agencies issued reports that were delayed by the government shutdown; and Freddie Mac reported that average mortgage rates fell for all types of loans it reports. The National Association of REALTORS issued its Existing Home Sales report on Monday. While 5.30 million home sales were expected an annual basis, September's reading fell short at 5.29 million sales. August's reading was adjusted from an original reading of 5.48 million, which equaled July's reading. Higher mortgage rates and home prices were cited as contributing to the slip in September's sales.
Sales of newly-built homes took a small step lower in October, but remain strong.
According to the Commerce Department, New Home Sales slipped 1,000 units last month, falling to 368,000 units on a seasonally-adjusted, annualized basis.
The final reading fell short of Wall Street expectations, and the government revised downward its initial findings from August and September by 2,000 units and 20,000 units, respectively.
A “new” home is a home that is considered new construction.
Furthermore, the number of new homes for sale nationwide ticked higher to 147,000 — the highest reading in 9 months.
However, in taking a broader look at October’s New Home Sales report, we see obvious strengths. For example, although home sales slipped last month, it remains the third-highest tally since the April 2010 expiration of the federal home buyer tax credit.
The highest reading? Last month’s 369,000.
In addition, the national new home inventory has dropped, off 8% from last year. Fewer homes for sales has been a driving force behind rising home prices. As compared to one year ago, the median new home price is up nearly six percent. More demand for buyers is a factor, too.
At the current sales pace, the complete U.S. inventory of new homes for sale would “sell out” in 4.8 months. This is a noteworthy data point because, as analysts point out, a 6.0-month supply of homes marks a market in balance.
Today’s new homes market, therefore, is a seller’s market; one in which home builders may be gaining pricing power and negotiation leverage over buyers. It’s one reason why home builder confidence has climbed to a 5-year high.
For buyers of new construction, 2013 is a critical year. Home prices may rise and mortgage rates may, too. And, along the way, it may get tougher to get a “great deal” on new construction.
If you’re planning to buy, therefore, consider moving up your time frame. After October’s small step backward, the time to buy a newly-built home may be now.