New-home sales reversed course from their 8.7% dip in August and grew 12.3% in September, according to a new report from the National Association of Home Builders (NAHB).
NAHB reported, using data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, that sales of newly built, single-family homes were at a rate of 759,000 in September. Sales were up year-over-year as well, a whopping 33.9%.
“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.”
The data:
- New single-family home inventory in August was 435,000, down 5.4% compared to a year ago. This represents a 6.9 months’ supply at the current building pace.
- Of the total home inventory, including both new and resale homes, newly built homes represent an elevated share of 31% of those available for sale, and nearly 16% of total home sales in August were new homes.
- The median new-home sale price in August was $418,800, down 3.3% from last month and 12.3% from a year ago. Experts say pricing is down due to builder incentive use and a shift toward building slightly smaller homes. The average sales price was $503,900.
- Regionally, on a year-to-date basis, new-home sales are up in all four regions: 2.8% in the Northeast, 0.5% in the Midwest, 5.4% in the South and 2.5% in the West.
“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,” added NAHB Chairman Alicia Huey. “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.”
