New home sales fell more than expected after spike in mortgage rates

Sales of new U.S. homes fell more than expected in October as a spike in mortgage rates weighed heavily on consumer demand. 

New single-family home purchases plummeted 5.6% to a seasonally adjusted annual rate of 679,000 units, the Commerce Department reported Monday. Economists surveyed by Refinitiv expected new home sales — which account for a small percentage of total sales — to come in at a rate of 723,000 units.

Sales remain up about 17.7% from the same time one year ago.

"Despite the month-over-month decline in sales, the pace of new home sales is on track with the pre-pandemic rate," said Jeffrey Roach, chief economist at LPL Financial. "Amid extremely low inventory of existing homes on the market, new home sales will likely remain robust to meet the demand."