In October, the National Association of Home Builders (NAHB) reported a 5.6% decline in new home sales, attributed to elevated mortgage rates averaging 7.62%, the highest since 2000. NAHB Chairman Alicia Huey acknowledged the challenge, stating, "New home sales fell back in October as interest rates moved higher."

 
Despite the dip, new home sales maintained a positive trend on a year-to-date basis, rising 4.6%, primarily due to constrained inventory in the resale market. NAHB Chief Economist Robert Dietz expressed optimism, noting, "Combined with sales incentives and a lack of resale inventory, demand has remained solid in 2023 and should improve in 2024 as interest rates move lower."

The median new home sale price saw a notable decrease in October, down 3.1% from September and 17.6% from a year ago, settling at $409,300. This shift was influenced by builder incentives and a move towards constructing slightly smaller homes, making the market more accessible. Approximately 33% of sales were within the $300,000 to less than $400,000 range, a significant increase from the previous year.

New home inventory, a critical factor in market dynamics, increased by 8.3% in October to 439,000, the highest since January. However, this elevated supply represents a 7.8 months' supply, slightly above the balanced threshold of six months. Of the total inventory, newly built homes constituted 30%, a significant rise compared to the historical average of 12%.

Contrasting this, the Census Bureau reported a 1.9% decline in privately owned housing starts in October, amounting to 1,372,000. However, construction permits rose by 1.1% in September. Huey emphasized the sustained demand for new construction. She highlighted builders' challenges, including heightened construction costs and concerns about regulatory costs, particularly proposed higher building code requirements linked to FHA mortgages.

https://www.nahb.org/news-and-economics/press-releases/2023/11/new-home-sales-weaken-in-october