Number: Sales of newly constructed homes in the U.S. surged in September as aspiring homeowners, unable to find inventory in resale homes, turned to homebuilders.
The Commerce Department reported Wednesday that U.S. new home sales rose 12.3% in September to an annual rate of 759,000, up from a revised 676,000 in the previous month.
The number is seasonally adjusted and reflects how many homes would be built throughout the year if builders continued working at the same pace each month.
Momentum on Wall Street exceeded expectations. Economists had expected new home sales to total 680,000 in September.
New home sales are at the highest level since February 2022.
The rate of new home sales was boosted by strong growth in the Northeast and Midwest.
August figures were slightly revised down. New home sales fell to a revised 676,000 in August, compared with initial estimates for an 8.7% decline.
New home sales figures are volatile from month to month and are frequently revised.
Key Details: The average sales price of a new home sold in September fell to $418,800 from $430,300 a month earlier.
The supply of new homes for sale fell 10.4% between August and September, equivalent to 6.9 months of supply.
All regions recorded growth in new home sales, with the Northeast recording the largest gain of 22.5%.
Overall, new home sales are up 33.9% from last year.
big picture: It’s a tale of two housing markets, where new home sales are rising while pre-owned home sales continue to decline.
Homeowners are reluctant to sell homes for fear of buying at 8% mortgage rates, so there is a severe shortage of existing homes on the market. Existing home sales moving at slowest pace since 2008, Redfin
A recent report said.
Builders are taking some advantage of the lack of inventory, but it’s unclear whether 8% rates will dampen interest in new homes. Builders may increasingly turn to sales incentives, such as mortgage rate buydowns, to maintain buyer interest.
what are they saying? “New home sales in September seriously challenged demand,” Neil Dutta, head of economics at Renaissance Macro Research, wrote in a note.
“It is hard to see this lasting as it will be more difficult for homebuilders to source potential buyers at more manageable rates with 30Y mortgages closer to 8%. At any rate, it is remarkable that we are seeing this type of activity with rates where they are,” he said.
Market reaction: Stocks DJIA SPX were down in early trading on Wednesday. The yield on the 10-year Treasury note BX:TMUBMUSD10Y was above 4.9%.
DR Horton, Inc. Including builders’ shares.
and Toll Brothers Inc.
There was a decline in the morning trading session.