Real Estate & Area News

New Home Sales See Biggest Jump in 33 Years

The US Commerce Department provided a bit of good news for the still recovering US housing market on Wednesday in its monthly report on new home sales. According to the report, sales of newly built homes surged 25.4 percent in October, marking the largest one-month increase in 33 years. Sales rose to a seasonally adjusted annual pace of 444,000, the report showed, following a revised 6.6 percent slide in September that brought sales to their slowest pace since April 2012. The agency also revised its figures for August and July sales to show a slightly slower pace of sales in those months.

While October's surge in new home sales is certainly a positive development, some economists cautioned that it reflects the slowdown in sales during the previous three months more than a major change in the economy. At 444,000 units, the latest sales pace is up nearly 22 percent on a year-over-year basis, but is still significantly short of the 700,000-unit pace considered healthy by most economists. Also tempering enthusiasm for the faster sales pace was the fact that it came at the expense of the value of new homes, which declined 4.5 percent from September. The median price for new homes sold in October, Commerce said, was just under $246,000, down 4.5 percent from the month prior and down less than 1 percent from the prior October.

While new home sales account for a very small portion of the overall housing market, the sector is considered a vital part of the economy as it has an impact on other parts of the economy. According to estimates provided by the National Association of Home Builders, every new home built in the US creates and average of 3 jobs for a year and generates almost $100,000 in tax revenue for the local community.

December 4, 2013