Sales of new homes shot up by a surprising 13 percent in October, the biggest monthly increase in 12 years, defying analysts' expectations of a decline, the Commerce Department reported today.
Analysts were guarded about the increase and said the jump could either be a last gasp for the booming housing market or a figure that next month will be revised downward.
The Commerce Department figures showed that sales of new single-family homes hit an all-time high annual rate of 1.42 million homes in October.
The surprisingly rosy new-home sales figures were released just one day after a gloomier report on the sales of previously-owned U.S. homes. Those figures showed that the sales of existing homes slowed by a more-than-expected 2.7 percent in October and inventory jumped to its highest level in almost 20 years.
Analysts had predicted new-home sales would decline by 1.8 percent in October rather than rise.
"I'm not taking it that seriously," said David Lereah, chief economist of the National Association of Realtors. "It's too big of a jump." Lereah noted that new-home sales figures are often subject to wide revisions.
The figures could show, though, that the housing boom "still has some legs left or another last gasp of air," Lereah said.
David Seiders, chief economist for the National Association of Homebuilders, said the jump could be the result of people wanting to buy before mortgage rates rise further. It could also be the result of builders offering sales incentives to keep buyers purchasing in a slowing market.
"Builders are noticing some buyer resistance to prices and rising interest rates," Seiders said. "They're rolling out sales incentives to some degree, although we don't know yet how widespread that is."
New-home sales were up in most regions of the country, the figures showed. In the West, they surged by 46.9 percent; in the Northeast, they jumped 43.3 percent. The South and Midwest had more modest increases.
Seiders noted that the new-home sales figures come with wide margins of error -- the Northeast numbers could vary up to 60 percent either way, he said.
"We're going to have to wait and see on this one," he said. "I don't believe new-home sales surged by this degree in October."