WASHINGTON - Sales of new single-family homes in the United States rose in October to a record level, led by double-digit growth in the Midwest, South, and West, according to Commerce Department data released last week.
New-home sales rose 16.3% in October, to 986,000 at a seasonally adjusted annual rate. In September, home sales had fallen 8.1%, to a revised 848,000, previously reported as 811,000. Analysts expected an October sales rate of 864,000.
"We've had unusually dry and unseasonably mild weather," said Diane Swonk, chief economist at Bank One Corp. in Chicago. "This whole fall is going to be very robust for new housing. We should be getting some catch-up from the hurricane as well. This is a part of the economy that has overheated."
New-home sales probably will set another record this year.
Through October, the home building industry was on pace for 919,000 in total sales, which would eclipse last year's record of 886,000.
New-home sales rose 40.4% in the Midwest, to an annual rate of 240,000; 18.1% in the West, to 268,000; and 10.3% in the South, to 406,000. Sales fell 11%, to a 73,000 rate, in the Northeast.
The number of homes for sale rose 0.6% in October, to an annual rate of 312,000, from 310,000 in September. The median price of a new home fell in October to $159,000, from $159,900. Through October, 791,000 new homes had been sold, compared with 755,000 the year earlier.
The inventory of new homes for sale at the current sales pace - a key gauge of consumer demand - fell to a 3.9-month supply, from 4.5 months in September.
October's inventory was the lowest since June, when it was also 3.9 months.
The outlook for housing still is for slower sales. A week ago the National Association of Realtors reported that sales of previously owned homes fell in October, the fourth drop in a row, to an annual rate of 4.79 million. That was the lowest since January 1998 and the first time the sales rate has been below 5 million since October 1998.
Higher borrowing costs since the Federal Reserve's decisions to raise interest rates this year have contributed to investors' expectations of more subdued sales in coming months. The Standard & Poor's Homebuilding Index, consisting of Centex Corp., Pulte Corp., and Kaufman & Broad Home Corp. shares, has declined almost 40% since Jan. 1.
But home builders continue to report profits. Last month Huntingdon Valley, Pa.-based Toll Brothers Inc., which sells homes for an average of $400,000 each, said contracts signed for new homes rose 21%, to a record $416 million, in its fiscal fourth quarter, which ended Oct. 31. And Washington Homes Inc. of Landover, Md., said orders were up 37% in its fourth quarter.
Rates on 30-year, fixed-rate mortgages are more than a full percentage point above last year. In October they averaged 7.89%, up 17% from the 6.74% average the year earlier.
Still, adjustable-rate mortgages - which account for 30.3% of the market, compared with 7.9% a year earlier - have kept sales from falling further. The average rate on a one-year adjustable mortgage, pegged to the one-year, constant-maturity Treasury index, was 6.45% the week that ended Nov. 27, according to Freddie Mac, the No. 2 U.S. mortgage buyer.
That translates into a monthly payment of $628.78 on a $100,000 loan, compared with $716.41 on a fixed-rate loan at last week's rate of 7.75%.
In a separate report the Labor Department said Thursday that the number of U.S. workers filing for state unemployment benefits rose in the week that ended Nov. 27 after having fallen to the lowest level in two months.
First-time jobless claims increased by 15,000, to a seasonally adjusted 291,000, after falling 11,000, to 276,000, the preceding week.