New home sales surge in September
With a lack of existing homes on the market, new home sales shot up in September.
Sales of new single‐family houses increased 12.3% to a seasonally adjusted rate of 759,000 compared to the revised August rate of 676,000.
According to estimates released this morning by the U.S. Census Bureau and the Department of Housing and Urban Development, the latest Monthly New Residential Sales report also places new home purchases 33.9% above the September 2022 estimate of 567,000.
“While more buyers are turning to new construction because of a lack of existing inventory, higher mortgage rates that are approaching 8% are expected to slow the market in the coming months as affordability conditions continue to worsen,” Alicia Huey, chairman of the National Association of Home Builders (NAHB) and a custom home builder and developer from Birmingham, Ala., said in reaction to the new report. “Higher interest rates not only raise the cost of housing for buyers, but for builders as well because of increased costs for financing construction loans.”
Surprisingly, the latest figures arrive at a time when the average 30-year fixed mortgage rate stands at more than 8.6% as of Oct. 24.
The median sales price of new houses sold in September 2023 was $418,800, declining 3.3% from a median price of $433,100 in the prior month. On a year-over-year basis, the median price is down 12.3% from $477,700 in September 2022.
The average sales price of new homes sold last month was $503,900, decreasing 3.6% from the average sales price of $522,700 in August. Compared to an average price of $530,100 in September 2022, prices fell nearly 5% on a year-over-year basis.
“New home sales surged in September largely due to the low existing home inventory rate, as many homeowners with attractive mortgage rates are electing to stay put rather than purchase a move-up home with a much higher interest rate,” said Danushka Nanayakkara-Skillington, NAHB’s assistant vice president for forecasting and analysis. “To compensate for this high interest rate environment, more builders are building smaller homes, which has resulted in a decline in the median new home price.”
New single-family home inventory in September was 435,000, down 5.4% compared to a year ago. This represents a 6.9-month supply at the current building pace.
Here’s how new home sales in September performed on a regional basis:
- In the Northeast, sales jumped forward 22.5% in September and soared 63.3% on a year-over-year basis.
- Sales in the Midwest improved 4.7% on both a monthly and year-over-year basis.
- The South saw strong sales gains of 14.6% for the month and almost 30% compared to the prior year.
- New home sales in the West climbed 7.5% in September while sizzling by 53.3% on a year-over-year basis.
The National Association of Realtors will release the latest Pending Home Sales Index tomorrow, Oct. 26.
