New home sales jump 6.2% in October
* New home sales spiked 6.2% to a seasonally adjusted annual rate of 430,000. That was up from 405,000 a month earlier and above forecasts for a reading of 404,000. The readings for the past few months were also revised higher by a net 7,000 units.
* Regionally it was a mixed bag. Sales fell 5.1% in both the Northeast and the West. They plunged 20% in the Midwest, but soared 23.2% in the South.
* The raw number of homes for sale continues to decline. It dropped to 239,000 from 250,000 in September. You have to go all the way back to May 1971 to find a lower level of new home inventory. The months supply at current sales pace indicator of inventory fell to 6.7 from 7.4. That's the lowest since December 2006. Meanwhile, the median price of a new home dipped 0.5% from a year earlier to $212,200.
The evidence continues to show stabilization in the housing market. Not a huge new bull market, mind you. But an end to the relentless flood of bad news we saw in 2006, 2007, 2008, and 2009.
In October specifically, sales rose by a greater-than-expected 6.2%. Home prices dropped by the smallest margin in almost a year. And the supply of new homes continued to plunge. New home inventory is now plumbing depths we haven't seen in 38 years. If you're looking for a sign that builders will need to start swinging their hammers again soon, this is it.
Elevated unemployment, tighter credit standards, and an ongoing influx of foreclosed, existing homes will ensure the recovery remains anemic. But it will be a recovery nonetheless.