The U.S. Census Bureau and the Department of Housing and Urban Development (HUD) released a joint report on Wednesday showing a 25.4% increase in sales of new homes compared to September’s numbers.
These numbers include only newly-constructed homes, not existing homes. The report gives a clearer picture of what the future might hold for builders, and the economy as a whole, since new home construction is a big part of the economy.
According to the report, a seasonally-adjusted 444,000 new single-family homes were sold in October 2013, compared to 354,000 in September. This also represents a 21.6% increase from October 2012.
The Midwest saw the largest jump percentage-wise, at 34% compared to the previous month. The southern U.S. had a strong showing at 28.2% increase.
Why such strong increases? A strengthening economy could be contributing to more brisk home sales. People need jobs to qualify for mortgages, and to have the confidence to buy a home in the first place.
In addition, October sales bounced off very low September sales. Buyers reacted in September to higher interest rates and home prices, crushing sales. It always takes time for consumers to adjust to new standards of affordability. But it looks like that finally happened in October.
Even with October’s strong showing, numbers are still below normal. Looking at sales back to 1963, new home sales seem to bounce around the 600,000 mark. Sales were well above that range in the years leading up to the housing crash, then fell substantially thereafter. New home sales are steadily creeping their way back up to the historical standard.
The next new home sales report is released on December 24 and will detail November numbers. It would signal continuing strength in the housing sector and overall economy if sales held or increased from October numbers.