October 2023 Residential Sales, Inventory and Prices

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Sales of new single-family houses in October 2023 were at a seasonally adjusted annual rate (SAAR) of 679,000 units (725,000 expected). This is 5.6% (±12.3%)* below the revised September rate of 719,000 (originally 759,000 units), but 17.7% (±17.9%)* above the October 2022 SAAR of 577,000 units; the not-seasonally adjusted (NSA) year-over-year comparison (shown in the table above) was +18.6%. For longer-term perspectives, NSA sales were 51.1% below the “housing bubble” peak and 2.5% below the long-term, pre-2000 average.

The median sales price of new houses sold in October was $409,300 (-3.1% MoM, or $13,000). The average sales price was $487,000 (-5.5%, or $28,400). Homes priced at/above $750,000 comprised 9.8% of sales, down from the year-earlier 14.0%.

* 90% confidence interval includes zero. The Census Bureau does not have sufficient statistical evidence to conclude that the actual change is different from zero.

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As mentioned in our post about housing permits, starts and completions in October, single-unit completions slipped by 9,000 units (-0.9%). Sales fell by a greater amount (40,000 units, or -5.6%), resulting in inventory for sale expanding in both absolute (+6,000 units) and months-of-inventory terms (+0.6 month). 

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Existing home sales retreated (160,000 units or -4.1) in October to a SAAR of 3.79 million units (3.91 million expected). The inventory of existing homes for sale expanded in both absolute (+20,000 units) and months-of-inventory (+0.2 month) terms. Because new sales retreated more dramatically (on a proportional basis) than resales, the share of total sales comprised of new homes decreased to 15.2%. The median price of previously owned homes sold in October dipped to $391,800 (-0.3% or $1,000).

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Housing affordability rose 1.7 percentage points as the median price of existing homes for sale in September retreated by $11,000 (-2.7% MoM; +2.5% YoY) to $399,200. Concurrently, Standard & Poor’s reported that the U.S. National Index in the S&P Case-Shiller CoreLogic Home Price indices decelerated to a not-seasonally adjusted monthly change of +0.3% (but +3.9% YoY).

“U.S. home prices continued their rally in September 2023,” said Craig Lazzara, Managing Director at S&P DJI. “Our National Composite rose by 0.3% in September, marking eight consecutive monthly gains since prices bottomed in January 2023. The Composite now stands 3.9% above its year-ago level and 6.6% above its January level. Our 10- and 20-City Composites both rose in September, and likewise currently exceed their year-ago and January levels.

“We’ve commented before on the breadth of the housing market’s strength, which continued to be impressive. On a seasonally adjusted basis, all 20 cities showed price increases in September; before seasonal adjustments, 15 rose. Prices in 17 of the cities are higher than they were in September 2022. Notably, the National Composite, the 10-City Composite, and 10 individual cities (Atlanta, Boston, Charlotte, Chicago, Cleveland, Detroit, Miami, New York, Tampa, and Washington) stand at their all-time highs.

“On a year-over-year basis, the three best-performing metropolitan areas in September were Detroit (+6.7%), San Diego (+6.5%), and New York (+6.3%). San Diego’s presence breaks the Rust Belt’s recent grip on the top three positions, but the bottom three continue to have a western flavor. Year-over-year, September’s worst performers were Las Vegas (-1.9%), Phoenix (-1.2%), and Portland (-0.7%). The Northeast (+5.3%) and Midwest (+5.0%) continue as the nation’s strongest regions, while the West (-1.3%) remains the weakest.

“On a year-to-date basis, the National Composite has risen 6.1%, which is well above the median full calendar year increase in more than 35 years of data. Although this year’s increase in mortgage rates has surely suppressed the quantity of homes sold, the relative shortage of inventory for sale has been a solid support for prices. Unless higher rates or exogenous events lead to general economic weakness, the breadth and strength of this month’s report are consistent with an optimistic view of future results.”

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The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.