Growing rate concerns and supply chain fears are boosting new home sales

US new home sales increase 14% in September

According to the US Department of Housing and Urban Development and the US Census Bureau, low existing inventories and buyers’ fears of a future mortgage rate hike, new home sales posted a solid gain last month.

Sales of newly built single-family homes in September rose 14% to a seasonally adjusted annual rate of 800,000 from a revised downward reading in August 2021.

“Limited existing stocks and low interest rates keep demand strong, and more and more potential buyers may come out of the close as they expect interest rates to rise in the future,” said Chuck Fowke, president of the National Association of Home Builders.

“Strong demand and persistent bottlenecks in the supply of building materials continue to put upward pressure on new housing prices,” said Jing Fu, senior economist of the NAHB. “Median new home selling prices are up 18.7% year-on-year. At the same time, only 21% of current sales are below $ 300,000, compared to a 35% pace a year ago. “

A new home sale occurs when a sales contract is signed or a deposit is accepted. The house can be at any stage of its construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, September’s reading of 800,000 units is the number of homes that would sell if this pace continued over the next 12 months.

Inventory remains stable at 5.7 months of supply, with 379,000 new single-family homes for sale, up from 286,000 in September 2020.

The median selling price continued to rise to $ 408,800 from the median selling price of $ 401,500 posted in August, and increased 18.7% year-on-year, due to higher development costs, including materials.

Regionally, since the start of the year, new home sales have increased 1.9% in the Northeast, 3.4% in the Midwest and 1.6% in the South, but have down 8.8% in the West.

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