Sales of new U.S. homes plummeted 8.9 per cent in October, as the number of newly built, unsold homes sitting on the market climbed to its highest level since 2009.
The Commerce Department said Wednesday that new homes sold at a seasonally adjusted annual rate of 544,000 last month. New-home sales have declined in four of the past five months. Over the past year, sales of new homes have dropped 12 per cent as higher mortgage rates have caused would-be buyers to back away.
The report adds to the evidence that the U.S housing market has stalled after years of prices climbing faster than incomes. The affordability pressures were offset by historically low mortgage rates, but the borrowing costs for homeowners shot up after President Donald Trump signed deficit-financed tax cuts into law at the end of last year. Sales of existing homes have tumbled 5.1 per cent this year, the largest annual drop recorded by the National Association of Realtors since July 2014.
Mortgage buyer Freddie Mac said that the average rate on the benchmark 30-year mortgage was 4.81 per cent last week, up from 3.92 per cent a year ago.
The decline has left homebuilders with 336,000 homes listed for sale. That is the highest level since January 2009, when the real estate market was still sorting through the wreckage of the last decade’s housing bubble.
New-home sales last month fell in the Northeast, Midwest, South and West.
The median sales price has tumbled 3.1 per cent from a year ago to $309,700.