Implications: New home sales dipped in October but are still in a general rising trend. Although new home sales fell 0.3% in October, and were revised down for last month, they still remain near the highest levels since April 2010. Sales are up 17.2% from a year ago. Meanwhile, as the lower chart to the right shows, overall inventories remain close to record lows. Although the months’ supply of new homes rose to 4.8, it remains near the lowest levels since 2005, well below the average of 5.7 over the past 20 years and not much above the 4.0 months that prevailed in 1998-2004, during the housing boom. The slight increase in new home inventories was mostly due to a rise in homes not started. Completed homes also added to inventories. The median price of a new home fell 4.2% in October, but still remains up 5.7% from a year ago, consistent with the positive year over year increases we have been seeing from other house price indices. Not only are prices up, but the median number of months a new home sits on the market before being purchased is now down to 5.9 months from 7.2 just one year ago. This is the lowest level in five years and shows demand is picking up. The road ahead for housing may be bumpy from time to time, but it looks better than it has in years. Look for housing to continue to move higher in 2013.
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