Washington, DC – Fueled by strong demand, low existing inventory and buyers’ expectations of higher mortgage interest rates in the future, new home sales posted solid gains last month, according to the National Association of Home Builders (NAHB).
Sales of newly built single-family homes rose 14% in September to a seasonally adjusted annual rate of 800,000 from a downwardly revised reading in August, according to new data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
“Limited existing inventory and low interest rates are keeping demand strong, and more potential buyers may come off the fence as they expect interest rates to rise in the future,” said Chuck Fowke, president of NAHB.
According to Jing Fu, senior economist, NAHB, median sales prices for new homes are up 18.7% year-on-year and only 21% of current sales fall below $300,000. “Solid demand and ongoing bottlenecks in the supply of building materials continue to put upward pressure on new home prices,” Fu said.
A new home sale occurs when a sales contract is signed or a deposit is accepted. The house can be in any construction phase: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the September reading of 800,000 units is the number of homes that would be sold if this rate continued over the next 12 months.
Inventory remains stable on a 5.7-month supply, with 379,000 new single-family homes for sale, compared to 286,000 in September 2020, and the median sales price continued to climb to $408,800 from $401,500 due to higher development costs, according to the NAHB.
According to the NAHB, new home sales increased 1.9% year-on-year in the Northeast, 3.4% in the Midwest and 1.6% in the South, but fell 8.8% in the West.