MTH Meritage Homes Corp

By Jeffrey Sparshott And Eric Morath 

WASHINGTON--Sales of newly built homes rose in October, leaving the housing market on track for its best year since 2007.

Purchases of new single-family homes rose to a seasonally adjusted annual rate of 495,000 in October, the Commerce Department said Wednesday, up 10.7% from September's revised 447,000.

The October rebound follows reports of renewed sales momentum for many home builders.

Taylor Morrison Home Corp. reported a 15% increase in October sales from a year earlier, while CalAtlantic Corp. posted an 8% increase. D.R. Horton Inc. reported "solid" sales in October, and Meritage Homes Corp. noted that its October sales were up more than 20%.

Toronto-based builder Mattamy Homes, which operates in Florida, North Carolina, Minnesota and Arizona, posted a frothy 93% increase in October sales in the U.S. from a year ago to 164 last month.

"I don't think people are jumping off the fence because of an [impending] increase in interest rates," Mattamy COO Brian Johnston said in an interview. "It's more about just doing better. It's more jobs. It's the confidence level. It's that fewer buyers are underwater on their homes."

The Federal Reserve is widely expected to raise its benchmark interest rate from near zero in December, a move that could lead to higher mortgage rates for many borrowers.

A 30-year fixed-rate mortgage averaged 3.95% in the week ending Nov. 25, Freddie Mac said, not far off from the 3.97% rate a year earlier.

Oakwood Homes LLC, a closely held builder operating in Colorado and Utah, saw a more modest 7% gain in its October sales to 69. Oakwood Chief Executive Pat Hamill said his sales people are encouraging buyers to purchase homes ahead of the Fed's anticipated increase in interest rates in December.

"The first-time home buyer market is very strong," Mr. Hamill said. "There's been a little softness above the $500,000 price point, but our average selling price is about $350,000. We've actually had to stop selling in our two most affordable communities because we were just selling too far out in advance."

Nationwide, October's pace of newly built home sales is up 4.9% from a year earlier, the Commerce Department said.

There were 5.5 months' supply of newly built homes in October, down from 6 months in September. The median sales price of new homes was $281,500, down 6% from $299,400 in October 2014.

Official new-home sales figures are volatile and frequently revised. October's headline number has a margin of error of plus or minus 17.7%.

But the broad trend suggests steady improvement for the housing market. The year-to-date rate of new home sales, not seasonally adjusted, is up 15.7% from the same period a year earlier.

And homes appear to be moving quickly, with the median number of months for sale falling to 2.8 in October, the shortest span on record.

Existing-home sales, which constitute 90% of the market, are also expected to reach their best sales level in eight years in 2015. But that market has been challenged by rising prices and low inventories.

The pace of existing-home sales fell 3.4% in October from September to a seasonally adjusted annual rate of 5.36 million, the National Association of Realtors said Monday.

Write to Jeffrey Sparshott at jeffrey.sparshott@wsj.com and Eric Morath at eric.morath@wsj.com

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(END) Dow Jones Newswires

November 25, 2015 11:54 ET (16:54 GMT)

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