New Home Sales Up, But at Slower Pace Than Forecast

New homes in the United States sold at a slower pace than forecast in October as builders focused on meeting demand at the upper end of the market.

Purchases climbed 0.7% to a 458,000 annualized pace from a revised 455,000 rate in September that was lower than initially reported, data from the Commerce Department showed Nov. 26. The median forecast of 73 economists surveyed by Bloomberg News called for the pace to accelerate to 471,000. The median price of a home surged to a record.

Strict lending rules and slow wage growth have hampered first-time buyers, prompting builders to cater instead to upper-income customers who are able to get financing or pay cash. Bigger gains in employment and wages would stoke a more-rapid and balanced recovery.

“You’re dealing with the aftermath of the crisis,” Jacob Oubina, senior U.S. economist at RBC Capital Markets in New York, said before the report. “Builders have been optimistic for quite a while now, but they haven’t seen that translate into actual activity.”

The median sales price of a new house surged 15.4% in October from a year ago to $305,000, the highest on record, the Commerce Department report showed.

Purchases rose in two of four U.S. regions, led by a 15.8% gain in the Midwest.