New Home Sales Still Soft

New home sales are soft but sellers are getting their prices, at least in October. New home sales came in at a lower-than-expected 458,000 pace vs 455,000 in September which has been revised 12,000 lower. August, which was originally reported at 504,000, has been revised down a second time, 13,000 lower in today's report to 453,000. The combined 25,000 in today's downward revisions paint a weaker-than-expected picture of the new home market.

This report is often volatile and volatility really appears in price data which show a 16.5 percent surge in the median price to a record $305,000. The year-on-year rate, which had dipped into the negative column in September, is suddenly at plus 15.4 percent. More thorough but less timely data on home prices in yesterday's Case-Shiller and FHFA reports offer no hint of a sudden acceleration in pricing power.

Supply of new home sales for sales is steady, at 212,000 vs 210,000 and 207,000 in the prior two months. On a monthly sales basis, supply is at 5.6 months vs 5.5 months in both September and August.

Looking at regions, sales in the South, which for new home sales is larger than all other regions combined, slipped 1.9 percent in the month with the West, the second largest region, down 2.7 percent. Sales rose 15.8 percent in the Midwest, which is a relatively small region compared to the South and even to the West, while sales in the Northeast, which is a tiny region in this report, rose 7.1 percent.

This report gallops up and down from month to month but the long slope is just about dead flat. Year-on-year, new home sales are up only 1.8 percent. Pending home sales for existing homes, also released today at 10:00 a.m. ET, are likewise flat.

Recent History Of This Indicator:
New home sales have been volatile in recent months but saw back-to-back gains in August and September despite a large jump in August which suggested some comeback the next month. However, there was a dip from the initial August estimate. New home sales, at a 467,000 annual rate, managed to top August's great surge but only after August was revised sharply lower, from 504,000 to 466,000. Still, September's 467,000 rate was the best of the recovery, going back to July 2008 with August's 466,000 right behind in second place. Supply was stable in the report with 207,000 new homes on the market versus 204,000 in August while supply relative to sales is unchanged at 5.3 months.