The numbers: Sales of newly built homes in the U.S. surged in September as aspiring homeowners, unable to find inventory in resale homes, turned to homebuilders.
U.S. new-home sales rose 12.3% to an annual rate of 759,000 in September, from a revised 676,000 in the prior month, the Commerce Department reported Wednesday.
The number is seasonally adjusted and refers to how many homes would be built over an entire year if builders continued at the same pace every month.
The pace exceeded expectations on Wall Street. Economists had forecast 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 a sharp rise in the Northeast and Midwest.
The data from August were revised slightly. New-home sales fell to a revised 676,000 in August, compared with the initial estimate of an 8.7% drop.
The new-home sales data are volatile month over month and are often revised.
Key details: The median sales price of a new home sold in September fell to $418,800 from $430,300 the month prior.
The supply of new homes for sale fell by 10.4% between August and September, equating to an 6.9-month supply.
All regions reported an increase in new-home sales, with the Northeast posting the biggest gains of 22.5%.
Overall, sales of new homes are up 33.9% compared to last year.
Big picture: It’s a tale of two housing markets, with new-home sales rising while sales of previously-owned homes continue to fall.
With homeowners unwilling to sell homes for fear of having to buy at 8% mortgage rates, there’s a severe lack of existing homes on the market. Existing-home sales are looking to be on track to be on the slowest pace since 2008, Redfin
said in a recent report.
Builders are reaping some of the benefits from the lack of inventory, but it’s unclear if 8% rates will dampen some of the interest in new homes. Builders may increasingly turn to sales incentives, such as mortgage rate buydowns, to keep buyers interested.
What are they saying? “New home sales defied gravity in September,” Neil Dutta, head of economics at Renaissance Macro Research, wrote in a note.
“It is hard to see this lasting since it will be more difficult for the homebuilders to buy prospective buyers down to more manageable rates with 30Y mortgages nearing 8%. At any rate, it is remarkable we’re seeing this sort of activity with rates where they are,” he added.
Market reaction: Stocks