Why new-home sales matter; latest data show a 6.2% increase
The government had some good news for the housing market this morning: Sales of new homes were up 6.2% in October over the previous month.
That makes for a seasonally adjusted annual rate of 430,000 units, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development. That was a 5.1% increase above the October 2008 estimate.
Although these estimates tend to fluctuate, economists care about the pace of new-home sales because construction is an important slice of America’s economy.
“New-home sales are what I am focusing on because they are the ones that are going to drive" gross domestic product, explained Cameron Findlay, chief economist at LendingTree.com.
“New-home sales are going to require the construction worker to go to the site, they are going to require new materials, they are going to require more labor -- all these things that are going to bode positively for the economy on a broad perspective,” he said.
The median sales price of new houses sold in October was $212,200. The seasonally adjusted estimate of new houses for sale at the end of October was 239,000. This represents a supply of 6.7 months at the current sales rate, the government said.
-- Alejandro Lazo
Photo: A construction worker attaches shutters at a new community called New Bristow Village in Bristow, Va. Credit: Associated Press