Dive Brief:

• Sales of new single-family homes dipped 1.9% in October from the downward-revised September figure to a seasonally adjusted annual rate of 563,000, the Commerce Department reported Wednesday. However, October’s rate was up 17.8% year over year.

• October’s sales figures came in below analyst expectations, with those polled by MarketWatch expecting a 595,000 pace for the month

• The median sales price of new homes sold in October was $304,500, compared to $313,500 in September and $284,000 in August. The supply of new homes loosened from September, with an inventory of 5.2 months on the market.

Dive Insight:

Other recent housing market reports have been more positive, citing an improving labor market boosting wages and helping buyers contend with the current environment of high prices while the sector's prolonged recovery continues. The Commerce Department reported last week that single-family starts climbed 10.7% from September to October to an annualized pace of 869,000 while the residential category overall hit a nine-year high during the month.

Meanwhile, existing-home sales were at their highest level in nearly a decade in October, posting a 2% increase from September to put the category on pace to add 5.6 million single-family homes, townhouses and condos during the year.

Tight inventory conditions, however, continue to push prices up. Home prices were up 6.3% year-over-year in September, according to the latest CoreLogic Home Price Index, and are expected to rise 5.2% from September 2016 to September 2017. Elevated prices are one of the reasons the U.S. homeownership rate continues to hover near a 51-year low.

Builders and lenders are seeking to allay this trend by targeting price-sensitive first-time buyers who have largely sat out of homebuying during the recession. In its October existing-home sales report, the National Association of Realtors noted that first-time buyers, who trend younger, accounted for one-third of sales for the month after grabbing their largest share in more than four years (34%) in September. This group tends to gravitate toward existing homes, suggesting that their current owners may finally be trading up to larger properties, which is key to loosening inventory and softening prices.

For more housing news, sign up for our daily residential construction newsletter.