Sales of new single-family homes fall 17.3 percent to 610,000 in October after an unrevised 738,000 in September. The October level is well below the consensus of 725,000 in the Econoday survey of forecasters. Sales are down 9.4 percent from a year ago. Sales are mixed across regions. In October, the Northeast is up 53.3 percent to 46,000 and the Midwest up 1.4 percent to 73,000, while sales in the South are down 27.7 percent to 339,000 and off 9.0 percent to 152,000 in the West. The weaker than expected overall reading is likely related to both a lack of supply and a lack of buyers in the South where two major hurricanes diverted new construction to recovery efforts and set back building plans for some new projections.

Also holding back sales may be the recent runup in mortgage rates. The Freddie Mac rate for a 30-year fixed rate mortgage averaged about 6.8 percent in July, fell to about 6.4 percent in August and then 6.2 percent in September, but increased to 6.5 percent in October. Along with rising prices and more stock of existing homes, higher rates have dampened demand for new homes with diminished affordability.

The supply of homes available for sale rose to 9.5 months' worth in October, the highest since 9.7 in December 2022. The median price of a new single-family home is up 2.5 percent to $437,300 in October and up 4.7 percent from a year ago.

The share of homes sold that are not yet started is 15 percent of total sales in October, down from 17 percent in the prior month. Homebuilders may be more cautious about starting construction in a cooler home market. They did manage to move more homes under construction at 38 percent of total sales in October after 36 percent in September. The share of homes completed is 47 percent of the total, the same as in September.

Home sales are seen falling back to a 725,000 annual rate in October after rising to 738,000 in September from 709,000 in August. Buyers were lured by lower mortgage rates in September but rates ticked up again in October and continued higher in November, by the way.

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.