Hurricanes in the South and high borrowing costs hindered the market in October
Sales of new homes across the US plunged to their lowest level for nearly two years last month thanks in large part to two devastating hurricanes in the South and a housing affordability crisis in many regions.
Government data released Tuesday showed that new single-family home sales slid by 17% in October, hitting a 610,000 annualized rate as Southern sales fell to their lowest pace for over four years.
The overall new-home sales figures marked the sector’s worst single-month performance since November 2022.
Hurricanes Helene and Milton heavily impacted housing market activity in the South, which saw a 28% drop in sales to 339,000, and countered sales gains in the Northeast and Midwest.
Consensus expectations had signaled new-home sales across the country would come in at 725,000 for the month, but a jump in the average 30-year fixed mortgage rate between September and October also helped weigh down homebuying sentiment.
What’s in store for new-home sales looking ahead?
Available housing supply increased to its highest level since 2022, coming in at 9.5 months nationwide – although First American deputy chief economist Odeta Kushi suggested brighter prospects could be on the horizon for the construction industry.
“Looking ahead, builders will continue to benefit from the lack of resale inventory and from their ability to use incentives, such as mortgage rate buydowns, to entice buyers off the sidelines,” she said. “Builders have a huge competitive advantage over the resale market in this way.”
Still, other hurdles for builders remain – not least the recent uptick in mortgage rates and supply-side snarls. “Despite the challenges, the new-home market will likely continue to outperform the existing-home market over the near term,” Kushi added, “because, unlike existing homeowners, builders are not rate locked-in.”
The median sale price of a new home nationwide in October was $437,300, the highest level for over a year.
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
