Home Sales Post Biggest Jump Since 1980

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Even with higher interest rates and lower affordability, sales of new single-family homes in the United States posted their biggest jump in more than three decades.

On Wednesday, the U.S. Census Bureau reported that purchases of new homes, measured by contracts signed, increased 25.4 percent to a seasonally adjusted 441,000-unit pace in October, compared to the September rate of 354,000 units. That is the biggest gain since 1980. Home sales were up 21.6 percent from a year earlier, but as the chart above shows, the housing market is still far below its glory days.

The results were better than expected. On average, economists estimated home sales to come in at a 425,000-unit pace. However, purchases of new homes in July and August were the two weakest months this year, while the pace of sales in July was the worst month since October 2012 and the biggest miss of expectations since May 2010. Adding insult to injury, sales in July and August were revised lower by a total of 59,000 units.

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