According to the U.S. Department of Commerce, new-home sales dropped 5.6% to a seasonally adjusted annual rate of 679,000 units in October, but sales for the month increased 17.7% on a year-over-year basis, Reuters reports. September's sales pace was revised to 719,000 units from the previously reported 759,000 units.
Economists polled by Reuters had forecast that new-home sales would fall to a rate of 723,000 units.
"Fed hikes are not having the desired effect because households have locked in low levels of mortgage rates during the pandemic," said Torsten Slok, chief economist at Apollo Global Management in New York.
Strong demand for new construction resulted in residential investment rebounding in the third quarter after contracting for nine straight quarters. The economy grew at a 4.9% annualized rate in the July-September quarter.
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