WASHINGTON – Sales of new U.S. homes shot up unexpectedly in October, climbing 13 percent to hit a record pace, according to a government report on Tuesday at odds with other signs of a slowdown in the long-hot housing market.
The gain in sales of new single-family homes was the biggest increase since April 1993 and took sales to a record annual rate of 1.42 million units from an upwardly revised 1.26 million in September, the Commerce Department said.
Wall Street economists had expected sales to slow to a 1.20 million pace from the 1.22 million rate previously reported for September.
"The demand for new housing surged, likely because rising mortgage rates motivated some potential homebuyers to accelerate their buying decisions," said Steven Wood, economist at Insight Economics in Danville, California.
However, Wood noted that inventories of unsold new homes were also climbing.
The number of homes still on the market at the end of October rose to a record 496,000, but at last month's hot sales pace that represented only a 4.3 months' supply, down from 4.7 in September.
"Moreover, despite the huge increase in sales, home price momentum has slowed as home builders are beginning to use discounts to motivate buyers," he said.
A number of other recent reports on housing had suggested a slowdown was underway after a five-year rally that pushed prices up sharply and fueled concerns the market had entered a speculative bubble.
The latest report showed the median home sales price rose 1.6 percent to $231,300 in October from $227,700 the prior month.
Sales showed strength in most regions of the country. In the West, they increased 46.9 percent, the biggest jump since December 1981. Sales rose 43.3 percent in the Northeast, and 1.9 percent in the South. The sales pace in both the South and West set records.
Sales fell 9.5 percent in the Midwest.
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