US October new home sales fall 5.6%, miss expectations

HOUSTON (ICIS)–US October sales of single-family homes fell 5.6%, well below market expectations, according to statistics released on Monday.

The following table shows the seasonally adjusted annual rate (SAAR) of October new house sales.

	Oct ’23	Sept ’23
New houses sold	679,000	719,000
New houses for sale	439,000	433,000
Month’s supply	7.8	7.2
Median sales price	$409,300	$422,300

Source: US Census Bureau

The number of new houses sold in October was well below 720,000 units expected in the market, said Kevin Swift, ICIS senior economist for global chemicals. In addition, the Census Bureau revised its sales figures for July through September, sending them lower.

The new home market has a 7.8 month supply. While this is up from September, it is down from 9.7 months in October 2022. Regardless, the supply of new homes is still above six months, the point that marks a house market in equilibrium.

The slight oversupply supply of new houses is in contrast to the shortage of existing houses, which is well below six months.

Builders have been targeting their homes towards first-time home buyers during the past year, a trend that is reflected by the decline in median sales prices, Swift said.

Such efforts are working against high mortgage rates. Average rates for 30-year home loans reached 7.29% during the most recent week, according to Freddie Mac, a company that buys and securitizes home loans.

For comparison, rates were below 5% before 2022.

Slow gains in real incomes have further eroded home affordability, which remains near record low levels, Swift said.

The following chart shows the historical new home sales and inventory levels.

The housing market is a key consumer of chemicals, driving demand for a wide variety of chemicals, resins and derivative products, such as plastic pipe, insulation, paints and coatings, adhesives and synthetic fibers, among many others.

Thumbnail shows a home under construction.

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