New Home Sales Unexpectedly Explode Higher, Prices Surge to Record High

Housing in front of the Atlanta skyline in Atlanta, Georgia, US, on Sunday, Nov. 13, 2022. Redfin Corp. is shuttering its iBuying business and laying off workers for the second time in almost five months, as the likelihood of a prolonged US housing slowdown continues to ripple through the industry. …

Elijah Nouvelage/Bloomberg via Getty Images

The primary transmission channel for the Federal Reserve’s monetary policy is supposed to be the housing market. In October, however, the market for new homes did not tune into the Fed’s attempt to slow down demand.

New home sales rose 7.5 percent to a seasonally-adjusted annual rose of 632,000, the Commerce Department reported Wednesday.
That was far in excess of the 575,000 forecast by analysts in Econoday’s survey. The prior month’s figure was revised down to 588,000 from the initial report of 603,000, making the month-to-month gain even larger.

It is not clear why sales rose so much in October. Some analysts have speculated that builders could have been chipping in concessions, such as high-end appliances and other fixtures, to promote sales. Some buyers may have decided to pull the trigger on home purchases for fear of rates going even higher next month.

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