SG: Eco Analysis - US Housing: New home sales rose modestly in October (B. Jones)

Eco Analysis - US Housing: New home sales rose modestly in October (B. Jones)

■ Closings on newly constructed dwellings moved higher in October

The number of newly constructed dwellings going to contract rose by 1.3% to a five-month high seasonally adjusted annual rate of 307,000 in October. The reported level of activity last month was below both our (330,000) and the median Street projections (315,000), however. Moreover, back-month revisions shaved 15,000 off the previously posted tallies for July through September.

■ Regional activity decidedly mixed

Regionally, activity was spotty during the reference period. New home sales rose by 10,000 in both the Midwest and West to 55,000 and 77,000, respectively. New home purchases in the Northeast held steady at 22,000, while the South posted a 16,000 decline to 153,000.

■ Demand and supply in balance but at low levels

As expected, the number of homes on the market was unchanged at a record low of 162,000. The reported sales and availability figures left the stock of unsold dwellings one tick lower at 6.3 months' supply. The October months' supply reading was in line with the long-term historical average and suggests that the demand and supply for new homes is in balance, but at very low absolute levels (see accompanying chart).

■ Home prices retreated for a fourth straight month in October

Selling prices remained on a downtrend in October. The median sales prices nationwide slipped by 0.5% to $121,300, while the countrywide average fell by 2.5% to $242,300. The latest data left the median and average contract costs 4.0% above and 4.8% below their respective year-ago levels. Looking ahead to tomorrow's S&P/Case Shiller report, we expect selling prices in the 20 metro areas canvasses to fall by 0.7% in September, compared to the consensus call for a 0.1% dip.