New US homes sales dip in October, still strong

Sales of new homes in the US ebbed slightly in October compared with the prior month, but remained significantly above year-ago levels, according to data released Wednesday.

Sales of new single-family homes were a seasonally adusted rate of 999,000 last month, according to Commerce Department data.

That was a 0.3 percent drop from the September level, but a 41.5 percent jump from the October 2019 level and above the 977,000 level projected by analysts.

The report was the latest indicator of the strength of the housing market amid the mixed and uncertain state of the broader US economy as the country contends with a surge in coronavirus cases.

The housing market has been boosted by low interest rates, a dynamic offset somewhat by limited supply that has supported prices.

At the end of the period, there was just 3.5 months worth of housing supply in inventory, compared with 5.9 months of supply in October 2019.

In October, the Northeast and Midwest both saw modest increases in sales in October from September, while sales dipped in the South and West.

Nancy Vanden Houten, economist at Oxford Economics, wrote in a note that rising coronavirus cases and weakening labor markets could dampen demand despite low interest rates.

Still, “the shortage of homes for sale, along with strong homebuilder sentiment and lean inventories of existing homes, should support new home construction even if the pace of sales cools in the months ahead,” she said.