Sales of newly built homes tumbled in October to a seasonally adjusted annual rate of 610,000, a 17.3% drop from the revised September rate of 738,000 units, according to a new residential sales report from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.

Zillow reported that the surprisingly low figures, which were also 9.4% below the sales for October 2023, were caused by rising interest rates and major disruptions from hurricanes Helene and Milton, which ravaged parts of Florida and other Southern states from late September to early October. Zillow reported that new home sales declines 28% in the South, the most of any region in the country.  

The median sale price for new homes in October was $437,300, and the average sale price for homes was $545,800. The seasonally adjusted estimate of new houses for sale at the end of October was 481,000, which represents a supply of 9.5 months at the current sales rate.

Mortgage rates dipped to 6.08% on Sept. 26, resulting in September new home sales reaching their highest level since May 2023, Zillow reported. Mortgage rates have since rebounded and are now at 6.84%, severely reducing home affordability across the country.

However, the new home sales slowdown may be short-lived. According to Zillow, mortgage rates are still below last year’s levels, and more housing inventory is coming on the market. At the same time, incomes continue to rise faster than prices, increasing the number of people who can afford to buy a home.