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October Housing Short on Good News

Sales of new homes remained stagnant in October, continuing a five-month lull, and building applications declined, adding doubt to the steady climb the housing recovery has made in 2012. New home construction reached a four-year high, though single-family housing starts dropped after a strong September showing.

The pace of new home sales fell 0.3 percent in October, to a 368,000-unit annual rate. The decline would have been larger, if not combined with a drastic downward revision of September's sales pace, from 389,000 to 369,000. The median sales price for a new home in October was 5.7 percent higher than a year earlier, but the pace of year-over-year price gains slowed for a second straight month.

Builders in October started construction on the most new housing units since July 2008, setting a seasonally adjusted annual rate (SAAR) of 894,000 units, a 3.6 percent gain from the month prior and 41.9 percent above October 2011, according to the Commerce Department.

Single-family home construction dipped 0.2 percent to an annual rate of 594,000, after setting a four-year high in September. Apartment construction, which is more volatile from month to month, rose 10 percent.

Applications for residential building permits, which indicate future activity, fell 2.7 percent to 866,000, after jumping 12 percent in September to a four-year high. Permit applications for single-family home builds, however, rose to their highest level since July 2008.

Housing starts have gained 87 percent above the recession low SAAR of 478,000 in April 2009. That's still short of the 1.5 million annual rate considered healthy.

Existing Homes

Existing home sales increased 2.1 percent in October, at a 4.79 million-unit annual rate (seasonally adjusted), following a downwardly revised 4.69 million-unit rate in September. The most recent reading, from a National Association of Realtors (NAR) report, showed a 10.9 percent gain over the 4.32 million-unit rate in October 2011.

Total existing housing inventory fell 1.4 percent to 2.14 million existing homes available for sale, representing a 5.4-month supply at the current sales pace, down from 5.6 months in September. The housing supply is at its lowest level since February of 2006, when it reached 5.2 months. Listed inventory is 21.9 percent below a year ago, when there was a 7.6-month supply.

Existing home prices increased as inventories fell. The national median existing-home price for all housing types - which includes single-family homes, townhomes, condominiums and co-ops - was $178,600 in October, which is 11.1 percent above a year ago. This marks eight consecutive monthly year-over-year increases, which last occurred from October 2005 to May 2006.

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December 11, 2019, 1:17 pm PDT

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