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October New Home Sales Spike Provides Dubious Boost

New single-family home sales increased more than 25 percent from September to October, according to the Commerce Department, erasing a negative three-month trend that included a massive downward revision to the August sales figures. The preliminary October report, which includes a margin of error close to 20 percent, is likely to receive a similar correction in future reports, according to market analysts.

Sales of new single-family homes surged 25.4 percent to a 444,000 annualized pace in October, following a 354,000 rate in September that was the weakest since April 2012, according to a December 4 report from the Commerce Department.

The sales jump was the largest in more than three decades, and industry analysts are already tamping down expectations that such a substantial increase will be borne out by future reports. Due to the government shutdown, data for September and October were released together, and the decline from August to September arrived simultaneously with a 15 percent downward revision to the August figures released nearly two months ago. The October data, according to the Commerce Department, is subject to a margin of error of more than 19 percent.

"The October 'preliminary' report released this morning, along with the terrible August and September data, is the outlier and will be revised lower next month, in line with the new lower trend that began in July," housing analyst Mark Hanson told NBC News.

New home purchases were down 6.6 percent in September from a 379,000 annualized pace in August that was weaker than the previously reported 421,000. The revisions and September data indicate the market took a bigger hit than previously estimated following the increase in mortgage rates. Purchases rebounded in all four U.S. regions in October, led by a 34 percent jump in the Midwest.

The median sales price decreased 0.6 percent from October 2012 to $245,800, and the supply of homes dropped to 4.9 months from 6.4 months in the September, which was the highest since August 2011. There were 183,000 new houses on the market at the end of October, down from 190,000 the prior month that was the most since December 2010.

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November 20, 2019, 2:49 pm PDT

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