After Strong Summer Surge, September New Home Sales Hit Pause

October 27th, 2020 by Editor

Newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau shows that sales of newly built, single-family homes in September fell 3.5 percent to 959,000, which is down from a revised August. However, the September 2020 rate is 32.1 percent higher on a year-to-date basis than the September 2019 pace, and new home sales are up 16.9 percent in 2020 overall.

“With sales up 32 percent from a year ago, the demand for new single-family homes remains strong as interest rates are at historic lows,” said NAHB chairman Chuck Fowke, a custom home builder from Tampa, Fla. “However, the recent run-up in lumber and other material costs is leading to an increase in pricing.”

A new home sale occurs when a sales contract is signed or a deposit is accepted, no matter the stage of construction, whether completed, under construction, or not yet started. In addition to adjusting for seasonal effects, the September reading of 959,000 units is the number of homes that would sell if this pace continued for the next 12 months.

“The pace of new home sales growth over the summer was going to slow given that the gap between sales and single-family construction reached an all-time high in August,” said NAHB chief economist Robert Dietz. “Indeed, September sales of new homes that had not started construction were up 47 percent compared to a year ago.”

Inventory inched up to a 3.6 months’ supply, with 284,000 new single-family homes for sale, down 32.1 percent from just over a year ago, in August 2019. September marks the third consecutive month with inventory running under four months’ supply. Of the inventory total, just 48,000 are completed, ready to occupy.

The median sales price was $326,800, an increase in the median price of a new home sale from a year ago, which was $315,700.

Regionally, on a year-to-date basis new home sales were up in all four regions: 22.5 percent in the Northeast, 25.9 percent in the Midwest, 14.4 percent in the South, and 18 percent in the West.

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