Sales of new homes fell in October to the weakest pace since March 2016 as rising borrowing costs and elevated prices keep buyers out of the market.
Single-family home sales fell 8.9% from the prior month to a 544,000 annualized pace, according to government data Wednesday. That was below all estimates in Bloomberg's survey of economists, which had called for 575,000, and compares with September's
The median sales price dropped 3.1% from a year earlier to $309,700, the lowest since February 2017, though still out of reach for many potential buyers.
All four regions showed declines, adding to signs the housing market is cooling amid rising costs of homeownership such as higher borrowing costs, and a scarcity of supply.
At the same time, steady job gains and elevated consumer confidence should help underpin demand. The supply of homes at the current sales rate rose to 7.4 months from 6.5 months in September. The number of new homes for sale at the end of the month increased 4.3% to 336,000, indicating improving supply.
The drop in purchases was led by a 22.1% slump in the Midwest, and an 18.5% decrease in the Northeast. The South had a 7.7% decline while the West fell 3.2%. New-home purchases are tabulated when contracts are signed, and account for about 10% of the market. They're considered a timelier barometer than purchases of previously owned homes, which are calculated when contracts close.
The report, released jointly by the Census Bureau and Department of Housing and Urban Development, tends to be volatile.
