The Commerce Department said on Wednesday U.S. single-family home sales rose for a third straight month in October, but issued another downward revision to the prior month.
New home sales gained 0.7 percent to a seasonally-adjusted annual rate of 458,000 units, while September’s home sales pace was revised down to 455,000 units from 467,000 units.
Economists polled by Reuters had forecast new home sales rising to a 472,000-unit pace last month.
New home sales account for roughly 8 percent of the housing market and tend to be volatile on a month-to-month basis, but when compared to October last year, sales were up 1.8 percent. However, AEI’s National Mortgage Risk Index for home purchase loans was up year-over-year, with FHA loans showing an elevated level of risk that would perform poorly in a low liquidity market.
The housing market remains weak in large part due to slow if any wage growth in the overall U.S. economy, which is causing a slow pace of household formation. In the month prior, new home sales increased by 7.1 percent in the Northeast and 15.8 percent in the Midwest. In the South, sales dropped 1.9 percent and also fell 2.7 percent in the West.
With sales rising only modestly, the stock of new houses available on the market increased 1.0 percent last month, which is the highest level since June of 2010.
At the current sales pace measured in October, it would take 5.6 months to clear the supply of houses on the market, up from 5.5 months in September. The median new home price jumped 15.4 percent from a year ago to a record $305,000.
Meanwhile, the National Association of Realtors said on Wednesday that contracts to buy previously-owned U.S. homes unexpectedly fell in October, falling to their lowest level in 4 months. The data sparked serious concerns over the housing market’s recovery.
The Pending Home Sales Index, which is based on contracts signed last month, dropped 1.1 percent to 104.1. The NAR, which is indisputably the strongest of the housing market lobby, attempted to spin the report after its released.
“In addition to low interest rates, buyers entering the market this autumn are being lured by the increase in homes for sale and less competition from investors paying in cash,” said Lawrence Yun, NAR’s chief economist. “Demand is holding steady but would be more robust if it weren’t for lagging wage growth and tight credit conditions that continue to hamper those individuals looking for relief from rising rents.”
Economists polled by Reuters had forecast pending home sales rising 0.5 percent last month. These contracts become sales after a month or two. Contracts rose in the Northeast, but fell in the South, West and Midwest.
Compared to October of last year, contracts were up 2.2 percent.