US sales of new houses fell in October after a downward revision to the prior month as decades-high mortgage rates weighed on demand.

Purchases of new single-family homes decreased 5.6% to a 679,000 annualized pace last month, government data showed Monday. The pace missed all estimates in a Bloomberg survey of economists.

Despite the decline, new-home sales have generally been rising for the past year as elevated borrowing costs discourage homeowners from moving. Even so, builders have had to coax some buyers with financial incentives on prices and rates amid the affordability crisis.

Mortgage rates peaked last month near 8% and have since receded on expectations that the Federal Reserve is nearing the end of its tightening cycle. If the retreat continues, that could boost resale inventory and buyer demand.

The median sales price of a new home fell to $409,300, according to the report from the Census Bureau and the Department of Housing and Urban Development. Even with the decline — now down more than 17% from a year ago — prices remain well above pre-pandemic levels.

New-housing inventory ticked up for a third month to the highest level since January. Sales fell in the Midwest to the lowest in nearly a year and declined in the West as well.

New-home sales are considered a timelier barometer than purchases of previously-owned homes, which are calculated when contracts close. Those sales fell by the most in nearly a year in October and remained at the lowest level since 2010.

The data are volatile, however. The report showed 90% confidence that the change in sales ranged from a 17.9% decline to a 6.7% gain.

--With assistance from Chris Middleton, Reade Pickert, Michael Sasso and Mark Niquette.

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