New Home Sales Unexpectedly Explode Higher, Prices Surge To Record High

Housing in front of the Atlanta skyline in Atlanta, Georgia, US, on Sunday, Nov. 13, 2022. Redfin Corp. is shuttering its iBuying business and laying off workers for the second time in almost five months, as the likelihood of a prolonged US housing slowdown continues to ripple through the industry. Photographer: Elijah Nouvelage/Bloomberg via Getty Images

The Federal Reserve’s monetary policy is transmitted through the housing market. In October, however, the Fed failed to slow down new home demand.

Wednesday’s Commerce Department report showed that new home sales rose by 7.5% to a seasonally adjusted annual growth of 632,000.

This was significantly more than the Econoday forecast of 570,000. The gain for this month was even greater because Econoday’s initial 603,000 report had reduced the previous month’s total to 588,000.

Despite rising mortgage rates for the majority of October there was an increase in home sales. The month’s contracts are used to determine new home sales.

It’s not clear why October saw such strong sales. Analysts think that buyers may have pulled the trigger to purchase a home to avoid paying higher interest rates next month.

The rising costs of home buying did not make it more attractive. In October the median house sale price rose to $493,000, from $455,700 in September.

Seasonally adjusted. There were 470,000 houses for sale at the end of October. This figure is significantly higher than the normal range of 4 to 6 month.