WASHINGTON (Reuters) - Sales of new U.S. single-family homes rose in October, but the sales pace for the prior month was revised sharply down as higher prices remain a hurdle for some first-time buyers.
New home sales increased 0.4% to a seasonally adjusted annual rate of 745,000 units last month, the Commerce Department said on Wednesday. September's sales pace was revised down to 742,000 units from the previously reported 800,000 units.
Sales rose in the densely populated South, as well as in the Midwest, but fell in the West and Northeast.
Economists polled by Reuters had forecast new home sales, which account for more than 10% of U.S. home sales, unchanged at a rate of 800,000 units. Sales fell 23.1% on a year-on-year basis in October. They peaked at a rate of 993,000 units in January, which was the highest since the end of 2006.
Sales soared over the summer of last year amid an exodus from cities to suburbs and other low-density locations as Americans sought more spacious accommodations for home offices and online schooling during the pandemic. With vaccinations allowing workers to return to offices and schools to reopen for in-person learning, the pandemic tailwind is fading.
Still, demand for new homes remains underpinned by an acute shortage of previously owned houses on the market.
The median new house price soared 17.5% in October to $407,700 from a year ago. There were 389,000 new homes on the market, up from 378,000 units in September. Houses under construction made up 62.2% of the inventory, with homes yet to be built accounting for about 28%. Builders are being constrained by shortages of materials and labor.
The government reported last week that the backlog of houses yet to be constructed in October was the largest in 15 years.
At October's sales pace it would take 6.3 months to clear the supply of houses on the market, up from 6.1 months in September.