The U.S. Census Bureau Wednesday morning released data on new single-family home sales for October. Sales rose 25.4% month over month, to a seasonally adjusted annual rate of 444,000, from a revised September sales figure of 354,000. Economists had been expecting a seasonally adjusted annual rate of 420,000. The October rate is 21.6% above the rate for October 2012. At the peak in 2005, new home sales posted a seasonally adjusted annual rate of nearly 1.4 million.
The one-month increase from September sales is the largest since May 1980.
The Census Bureau also reported that the median sales price for new homes sold in October was $245,800 and the average sales price was $321,700. At the end of October, the number of new homes for sale totaled 183,000, a supply of 4.9 months at the current sales rate.
The sharp month-over-month increase could very well be a sign that home buyers are getting used to mortgage interest rates in the 4.5% range. A year ago, mortgage rates were a full point lower, and the steady rise in interest rates through this past summer was believed to have hurt sales. Now, sales are improving and house price increases are slowing. This Friday's report on nonfarm payrolls could indicate if further improvement in new home sales is in the cards for the coming year.