US new home sales soar in October

(December 09, 2013 )

·         New home sales in the US soared a whopping 25.4% to 444,000 in October 2013, thereby beating market expectations for 429,000 annualized unit sales in the month. This followed a 6.6% drop to 354,000 in September, also released in today’s report following delays as a result of the government shutdown in October.·         The inventory of unsold new homes declined by 3.7% to 183,000 in October from 190,000 in September. Combined with the robust pickup in overall sales, this resulted in the months’ supply of new homes available for sale falling sharply to 4.9 from 6.4 months in September.The surge in the pace of new home sales in October leaves the measure a whopping 20.4% above the average 369,000 units in the third quarter of 2013 although that reading represented the lowest quarterly level since the second quarter of 2012. Today’s report provided an indication that the new build sector is rebounding following a slowing this summer that likely reflected rising mortgage rates and firming home prices. With underlying housing demand remaining solid as a result of an improving economic backdrop and the accompanying improvement in labour markets, we expect residential investment will gain momentum with robust gains playing a key role in the continued expansion of the overall US economy for the remainder of the year and during 2014.