US home sales remain near fastest pace since 2023

By Michael Sasso | Bloomberg

Sales of new homes in the US were little changed in October but remain near the strongest pace since 2023 as builders lured anxious customers with price cuts and incentives.

New single-family home sales eased 0.1% to an annual rate of 737,000 following a 3.8% September increase, according to government data released Tuesday. The report, which included the first estimate of September sales, was delayed by the record-long federal shutdown.

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The median projection of economists surveyed by Bloomberg was for a 715,000 annualized pace of contract signings in October.

The steady pace of sales helped builders make only a slight dent in a still-elevated surplus of houses on the market compared with earlier in the year. New-home inventory was unchanged at 488,000 units in October from a month earlier, still near the highest since 2007.

Economists see the nation’s housing market rebounding gradually this year, with builders continuing to entice customers with incentives while waiting for a further decline in mortgage rates.

In December, 67% of homebuilders reported using sales incentives, a record in the post-Covid period, while a still-high 40% reported cutting prices, according to a monthly survey by the National Association of Home Builders and Wells Fargo.

While still a hurdle for million of Americans, financing costs have eased slightly in recent months. Mortgage rates, which approached 7% in May, reached a more than one-year low of 6.25% at the turn of this year.

Meantime, the median sales price of a new home decreased 8% in October from a year earlier to $392,300, the government report showed. The annual decline was the largest since August 2024.

“Bloated inventories will likely weigh on prices in the near term, but we expect sales volumes to improve in the year ahead, supported by lower financing costs and policy tailwinds,” said Stuart Paul, a Bloomberg economist.

By region, October sales fell in three of four regions, including a more than 36% plunge in the West to the slowest pace since 2022. The Pacific Coast experienced torrential rainfall events during the month.

In the South, the biggest homebuilding region, purchases increased 16.9% to an annual rate of 513,000 — the fastest since March 2021.

Late last year, a sluggish job market and poor consumer confidence, along with the anticipation of lower interest rates and falling prices, “pushed many consumers into full wait-and-see mode,” Ali Wolf, chief economist at property data firm Zonda, said in an email before the report.

This year, sales may grow in the low-to-mid single digits as interest rates trend lower and builders boost the number of housing subdivisions they open, Bloomberg Intelligence analyst Drew Reading said in a Dec. 30 note.

President Donald Trump has proposed a flurry of initiatives in recent weeks to address housing affordability. Among those, Trump proposed banning institutional investors from buying single-family homes and directed Fannie Mae and Freddie Mac to buy $200 billion in mortgage bonds in an effort to lower borrowing costs.

New-home sales are seen as a more timely measurement than purchases of existing homes, which are calculated when contracts close. However, the data are volatile on a monthly basis. The government report showed 90% confidence that the change in new-home sales ranged from a 14.3% decline to a 14.1% gain.

On Wednesday, the National Association of Realtors will release December previously owned home sales data.