Moderating interest rates drive new-home sales up
Dec. 5, 2013 – Moderating interest rates after a summer of rising mortgage rates caused new-home sales to go up in October, according to a NAFCU Macro Data Flash.
NAFCU Research Assistant Doug Christman analyzed data from the Census Bureau and found that all four regions experienced sale increases in October. The data showed the Midwest with the most growth, 34 percent; and the West with the least growth, 15.2 percent. Sales in the South, Northeast and Midwest were all up from last year, but sales in the West fell 14.2 percent. New-home sales were up 25.4 percent from September, increasing by 90,000 units to 444,000 annualized units in October.
“Rising mortgage rates over the summer put downward pressure on new-home sales, but activity increased when interest rates moderated in October,” Christman wrote. “Median new-home prices fell in recent months as rising interest rates made home ownership less affordable. However, the Federal Reserve’s decision to maintain asset purchases at the current pace should help keep interest rates in check in the near term.”
The months of available inventory in October were down from September – from a revised 6.4 months to 4.9 months – and the number of unsold homes on the market decreased to 183,000 units. The median new-home price decreased from $257,400 in September to $245,800 in October – slightly down from $247,200 a year ago.
NAFCU Macro Data Flash