Purchases of newly built single-family homes—a relatively narrow slice of all U.S. home sales—fell 8.9% to a seasonally adjusted annual rate of 544,000 in October, the Commerce Department said Wednesday. Economists surveyed by The Wall Street Journal had expected a 4.0% increase or 575,000 new home sales.
All U.S. regions experienced new-home sales declines last month, with sales in the Northeast dropping 18.5% on the month.
From a year earlier, U.S. sales in October were down 12%. The months supply of homes on the market rose to 7.4 in October, the largest supply figure since February 2011.
In the broader housing market, a shortage of available homes has fed a rapid run-up in home prices, creating an affordability crunch. While price growth has slowed some, it appears in part to reflect weakening demand, as inventory has built up in recent months.
Mortgage rates have risen in the last year to just shy of 5%, a level analysts say could also deter many would-be buyers. Many current homeowners are unwilling to sell, too, because such a move would mean forgoing their low interest rates.
“Almost all the trends in the U.S. housing market have been negative in recent months as housing market activity continues to adjust to higher mortgage rates,” Sam Khater, Freddie Mac’s chief economist, said Tuesday.
Sales of previously owned homes rose 1.4% in October from the previous month although they fell on an annual basis, signaling continued weakness in the housing market.