October was a great time to be in the housing industry! New home sales were up by 6.2 percent between September and October – the fastest pace we’ve experienced in a decade, according to the Commerce Department. There were 685,000 new homes sold in October (seasonally adjusted rate), representing the best sales month we’ve seen since the pre-recession days of October 2007!
The majority of this sales growth occurred in the Northeast and Midwest, though the South and West experienced some pick-up as well. The Commerce Department believes there are a few factors contributing to this break-neck pace. First, demand is outpacing supply. Americans are hungry for homes, and the supply of inventory provided by homebuilders and sellers is not enough to satiate this appetite. Second, the unemployment rate sits at 4.1 percent, a very healthy number, which bodes well for the strength of our overall economy. Third, as you’re well aware, 30-year mortgage rates are still averaging less than 4 percent.
OPPORTUNITY STILL AWAITS
Those hoping to jump into the housing market will also find this next stat promising: the average sales price of a new home rose 13.6 percent over the previous 12 months, sitting at $400,200. As I mentioned, some of this increase is due to the supply-demand imbalance, making existing homes more valuable than ever! This number should be viewed in a positive light all the way around. Those worried they’ve missed their opportunity to buy should fear not. The still-low mortgage rate means borrowers can lock in a good deal, while the uptick in price shows forward momentum for their potential investment opportunity.
While the holiday season tends to be a slow period industry-wide, I encourage you to encourage your clients to start looking now. The National Association of Realtors notes there is only a 4.9 months’ supply of new homes on the market right now. Plus, homeowners looking to unload toward the end or beginning of a year are traditionally motivated to sell, so they may be able to snag a deal!