U.S. new home sales were little changed in October, near the strongest pace since 2023, as builders lured anxious customers with price cuts and incentives.
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Sales of new single-family homes fell 0.1% to 737,000 year-on-year after rising 3.8% in September, government data released Tuesday showed. The report, which included the first estimate of September sales, was delayed by the record-long federal shutdown.
The average forecast of economists surveyed by Bloomberg was for annualized contract signings of 715,000 in October.
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The steady pace of sales meant builders could make only a small dent in the still-large surplus of homes on the market compared to earlier in the year. The stock of new homes remained unchanged in October at 488,000 homes compared to a month earlier, still almost the highest since 2007.
Economists see the country’s housing market gradually recovering this year, with builders continuing to entice customers with incentives in anticipation of a further decline in mortgage rates.
In December, 67% of homebuilders reported using sales incentives, a record in the post-Covid period, while a still-high 40% reported they had reduced prices, according to a monthly report.
While they still pose a hurdle for millions of Americans, borrowing costs have fallen slightly in recent months. Mortgage rates, which approached 7% in May, reached a more than one-year low of 6.25% around the turn of the year.
Meanwhile, the average sales price of a new home fell 8% in October from a year earlier to $392,300, the government report showed. The annual decline was the largest since August 2024.
By region, sales fell in three of four regions in October, including a drop of more than 36% in the West, the slowest pace since 2022. The Pacific coast saw severe storms.
In the South, the largest housing region, purchases rose 16.9% to an annual figure of 513,000 – the fastest since March 2021.
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Late last year, a sluggish labor market and low consumer confidence, along with expectations of lower interest rates and falling prices, “pushed many consumers into a full wait-and-see mode,” Ali Wolf, chief economist at real estate data firm Zonda, said in an email ahead of the report.
This year, sales could grow in the low to mid-single digits as interest rates fall and builders increase the number of residential subdivisions they open, Bloomberg Intelligence analyst Drew Reading said in a Dec. 30 note.
President Donald Trump has proposed a series of initiatives in recent weeks to address housing affordability. Among them, Trump proposed banning institutional investors from buying single-family homes
Sales of new homes are seen as a more timely measurement than purchases of existing homes, which are calculated when contracts close. However, the data is volatile month to month. The government report found that 90% believed the change in new home sales ranged from a fall of 14.3% to an increase of 14.1%.
On Wednesday, the National Association of Realtors will release data on home sales in December.