U.S. new home sales likely to have risen slightly in October

New home sales in the U.S. are expected to have grown slightly in the month of October. In the prior month, new home sales had increased 3.1 percent; however, the prints from June to August were downwardly revised by a huge 85,000 units, indicating a slightly slower rate of sales than estimated earlier. According to a Societe Generale research report, new home sales are likely to have climbed 2.9 percent to 610,000 units in October.

The NAHB index for November, which looks at conditions from mid-October to mid-November, remained stable at 63. The present sales measure had stayed the same at 69, while the prospective buyers’ traffic component rose by one point to 47.

In the meantime, single family housing starts had surged 10.7 percent in October, whereas building permits for one-family homes rose 2.7 percent. The rises in starts tend to foreshadow gains in sales, as builders do not usually break ground on new homes unless demand is strong, noted Societe Generale.

Even if the rise in one-family starts in October indicates towards a strong increase in new home sales, new home sold but not yet started rose sharply by nearly 29 percent in August and September combined. Hence the sharp increase in October in single-family starts might show builders catching up to an increasing backlog of orders, added Societe Generale.

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