Flight From the Cities: New Home Sales Up 41.5%

New single-family houses sold in October at a seasonally adjusted annual rate of 999,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.

The figure for September sales was revised up from 959,000 to 1,002,000. That was initially reported as a decline from August and below expectations.

The October figure is 41.5 percent above the sales figure from a year earlier. Apart from the revised September number, it is the fastest sales rate since November 2006.

Figures were revised up for August and July, as well. That indicates that the boom in single-family homes has been even stronger than the data suggested.

Extremely low mortgage rates and a surge in demand for single-family homes has lifted the residential real estate market this year. Demand for commercial properties, from offices to rental apartments, is down in many big cities as remote working, closed schools, rising murders, and shuttered urban amenities have sent Americans searching for houses in the suburbs.

New homes account for about 14 percent of the housing market. But because homebuilding is labor-intensive and new homes need to be outfitted with consumer goods, the category punches above its weight-class when it comes to the broader economy.

The median selling price rose 2.5 percent from a year earlier to $330,600, an indication that demand for new homes remains very high. Supply has struggled to catch up with demand for homes after the building industry shutdown across much of the country this spring. A shortage of existing homes on the market is pushing some buyers into the new home market.

The supply of new homes fell on a seasonally adjusted basis, indicating further tightening of an extremely tight buying conditions seen over the summer. At the current pace of sales, there are 3.3 months worth of new homes on the market. September’s inventory figure was revised down to 3.3 months. These are the tightest inventories in data going back to 1963. Ordinarily there are between 4 to 6 months worth of homes on the market.