According to Bloomberg News, the sales of new homes in the United States were up in October implying that there is a stabilizing demand amidst the ongoing disruptions in the demand and supply chain and while buyers dodge and negotiate with rising costs.
There was more demand for the new single-family homes that increased to a whopping 745,000 recording a 0.4% increase at annualized pace after a revised figure of 742,000 as recorded in September as data shown by the government Wednesday. In a Bloomberg survey carried out by economists, the median estimate called for was 800,000 rate.
As per a report which was made available by the US Census Bureau and the Department of Housing and Urban Development, it was revealed that the median sales cost of a new home increased 18% as compared to a year earlier to a record figure of $407,700.
The main factors that have triggered the demand for new homes include the absence of many options in the resale market, prevailing low mortgage rates, and a desire to reside in spacious spaces especially for the Americans that are working remotely. Despite these factors, some areas have proved to be hindrances in this sector, the main ones being transportation bottlenecks, increased cost of materials, shortage of workers that have proved to be a glitch in the construction of residential properties. This in turn has led to the delay of completion of projects thereby causing the prices to be pushed further up for many buyers.
Bloomberg News reports that as of October end, there was the sale of new homes which accounted for as many as 389,000, which is the maximum in the last 13 years, however, 28% of the houses among them have not yet been started. Given the present pace of sale, it would take roughly 6.3 months before the supply of these new homes is exhausted in comparison to 3.6 months which was at the beginning of the current year.
Wednesday’s report also revealed that the number of homes that were sold in October and the ones that were waiting to be constructed, a signal that measures backlogs increased from one month earlier to 271,000. The total number of homes that were sold with construction still in progress eased to around 291,000, which is the lowest since June 2020.
A separate data that has been released earlier this week also revealed that the purchase of houses that have been previously owned and that which constitutes the major market share jumped in the last month to the highest ever since the beginning of the year as the demand skyrocketed.
According to Bloomberg News, the purchase of new homes constitutes 10% of the market and is calculated when the contracts are signed. They are being considered as a “timelier barometer” as compared to the purchase of homes that were previously owned, which then will be calculated when the contracts close.
Data related to new homes are volatile as per the report and it also showed a 90% confidence in the fact that the change in sales figures ranged from a decline of 20.7% to an increase of 21.5%.