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Yesterday's (Wednesday) report of a drop in new home sales for October briefly sent shudders through a housing market that has appeared on the road to recovery, but experts immediately offered assurances that the bad news was temporary.
"The new-home sales data are volatile and revision-prone and we are not changing our view that a modest recovery in home sales, construction activity, and prices is well under way," John Ryding and Conrad DeQuadros of RDQ Economics said in a research note.
New home sales fell 0.3% in October, to an annual rate of 368,000 compared to September's 369,000. Economists had expected a rate of 390,000.
Though a slight drop from the previous month, October's new home sales rate is actually up 17.2% year over year.
And while far below the peak of 1.4 million reached at the height of the housing bubble, new home sales continue to creep up from the sub-300,000 lows seen in 2010 and 2011.
That, combined with recent positive trends from just about every other housing indicator, such as existing home sales, housing starts, building permits, and the home builder sentiment index, had most analysts brushing off the negative new home sales numbers.
On Monday, for instance, the Case-Shiller index for the third quarter showed housing prices nationwide were up 3.6% from the same period one year ago, its second year-over-year gain.
"We expect new single-family housing demand to continue its modest upward trend throughout the next year, driven by record-high affordability," Yelena Shulyatyeva, an economist with BNP Paribas, said in a research note.