Sales of new single-family homes are down 5.6 percent to 679,000 units at a seasonally adjusted annual rate in October after a downward revision to 719,000 units in September. Sales are up 17.7 percent year-over-year. The October sales pace is well below the consensus of 752,000 units in the Econoday survey of forecasters. Sales are up a solid 13.2 percent month-over-month in the Northeast, up 2.1 percent in the South, but down 16.4 percent in the Midwest and 23.3 percent in the West.

The sharp overall decline in sales of new single-family homes likely reflects the rapid rise in mortgage rates in September and October, although rates have fallen somewhat in November. The Freddie Mac average rate for a 30-year fixed rate mortgage was up to 7.20 percent in September, climbed to 22-year highs of 7.65 percent in October, but has eased to 7.57 percent for November to-date.

There is also the matter of the availability of affordable homes to purchase. The supply of homes rose to 7.8 months' worth in October after falling to 7.2 months' worth in September. Supplies of homes to purchase remain relatively narrow compared to a year ago when there were 9.7 months' worth of homes available. Home prices have moderated somewhat for new single-family units as homebuilders offer concessions to tempt buyers. The median price of a new single-family home is down 3.1 percent to $409,300 in October from $422,300 in September and down 17.6 percent compared to a year ago. Some of this is due to builders switching to smaller homes to fill the gap created by the dearth of units in the existing home market which are the more usual first purchase for homebuyers.

Homebuyers who have locks on lower rates from August and September are exercising those options by contracting for units not yet started or snapping up completed units. The share of sales for units not yet started rose to 17 percent in October after 15 percent in September and 15 percent a year ago. Sales of units under construction still account for a little under half of all sales at 42 percent in October after 47 percent in September and 46 percent in October 2022. Sales of completed units point to relatively few new construction projects actually being unsold by the time these are finished. In October, 41 percent of completed units are sold compared to 38 percent in September and 40 percent in the same month last year. Builders are being cautious about allowing unsold inventory to accumulate.

From a lower-than-expected 676,000 in August and September's much higher-than-expected 759,000, forecasters see annual sales falling back to 725,000 in October.

New home sales measure the number of newly constructed homes with a committed sale during the month. The level of new home sales indicates housing market trends and, in turn, economic momentum and consumer purchases of furniture and appliances.

This provides a gauge of not only the demand for housing, but the economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as new home sales, investors can gain specific investment ideas as well as broad guidance for managing a portfolio. Each time the construction of a new home begins, it translates to more construction jobs, and income which will be pumped back into the economy. Once the home is sold, it generates revenues for the home builder and the realtor. It brings a myriad of consumption opportunities for the buyer. Refrigerators, washers, dryers and furniture are just a few items new home buyers might purchase. The economic"ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month. Since the economic backdrop is the most pervasive influence on financial markets, new home sales have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the new home sales data carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings companies.