WASHINGTON - Fewer Americans purchased new homes in October, but sales are still much stronger this year than in 2015 — a positive sign for the housing market.
The Commerce Department said Wednesday that new-home sales fell 1.9% last month to a seasonally adjusted annual rate of 563,000 units. Still, sales through the first 10 months of this year are 12.7% higher than during the same period in 2015.
Demand for new homes has surged because of a stable job market and low mortgage rates. That has strained supplies as builders have failed to keep pace with homebuyers. Yet new-home sales are running below their historic averages as housing continues to heal from the foreclosures and disruptions that led to the Great Recession at the end of 2007.
Sales fell last month in the Northeast, Midwest and South, while improving in the West. Just 5.2 months’ supply of new homes are available on the market, down from 5.6 months a year ago.
The limited selection of new homes has prompted higher prices. The median sales price increased 1.9% from a year ago to $304,500.
The National Association of Realtors said Tuesday that sales of existing homes rose 2% to a seasonally adjusted annual rate of 5.6 million.
The rising sales levels have yet to coax more sellers into the market. Sales listings for existing homes have fallen 4.3% over the past year to 2.02 million homes. The shortage has pushed up the median sales price of existing homes 6% from a year ago to $232,200.
One uncertainty in the housing market will be mortgage rates, which helped fuel sales gains this year.
Mortgage rates have also leapt upward in the weeks after Donald Trump won the presidential election. The average 30-year, fixed-rate mortgage surpassed 4% this week, after staying below 3.5% during the end of October. Investors expect the budget deficit to increase under Trump, prompting the interest rate increase.
Manufacturing orders surge in October
Orders for big-ticket manufactured goods increased in October by the largest amount in a year, reflecting a surge in demand for commercial airplanes. The category that tracks business investment spending showed a far more modest advance, indicating this key category remains under stress.
The Commerce Department says orders for durable goods rose 4.8% in October. That is the best showing since a similar advance in October 2015. The gain primarily reflected a 94.1% jump in demand for commercial airplanes, an extremely volatile category.
The category that tracks business investment plans was up 0.4%, erasing only a small part of a 1.4% plunge in September. Business investment spending has been a drag on the economy this year, reflecting in part big cutbacks in the energy sector.
Applications for unemployment aid rose slightly last week
In a separate report, more Americans sought unemployment benefits last week, but claims remain at levels showing that American workers enjoy job security.
The Labor Department says applications for jobless aid rose by 18,000 to a seasonally adjusted 251,000. They had fallen the previous week to the lowest level since 1973. The less-volatile four-week average slid by 2,000 to 251,000. The overall number of people collecting unemployment checks was 2.04 million, down more than 6% from a year earlier.
Weekly claims have come in below 300,000 for 90 straight weeks, longest streak since 1970.
Layoffs are a proxy for layoffs, and the current levels suggest the employers are confident enough in the economy to hold onto their workers. The unemployment rate is 4.9%, close to what economists consider full employment.