The U.S. housing market sales plunged to their lowest level since March 2016.
Sales of new U.S. single-family homes tumbled to a more than 2½-year low in October amid sharp declines in all four regions.
Further evidence from The Commerce Department announced that higher mortgage rates were hurting the housing market, dropping new home sales 8.9% to a seasonally adjusted annual rate of 544,000 units last month, the lowest level since March 2016, and the biggest percent drop since December 2017, Reuters reported.
The Commerce Department data also showed weakness was most pronounced in the Northeast, which plunged 18.5% to the lowest level since September 2015. The Midwest witnessed double-digit drops as the hurricane-ravaged South also took a big hit declining 7.7% to its lowest level since July 2017.
New-home sales are just 2.8% higher than in the same period last year.
In October, there were 336,000 new homes on the market, the most since January of 2009, and up 4.3% from September of this year, however, the median price of anew house fell 3.1% to $309,700 in comparison to October from of last year, while the inventory-to-sales ratio rose to 7.4 months (6 months is considered a “balance” market).
“If the economy manages to right itself with real wage growth expanding and housing affordability holding relatively steady (prices and mortgage rates), there is a sufficient backlog of demand to reboot housing for this cycle,” said Steve Blitz, chief U.S. economist for TS Lombard, after the release of October housing starts data earlier in the month.