New single-family home sales increased annually and monthly in September, according to the latest release from the U.S. Census Bureau and the Department of Housing and Urban Development.
The report recorded that new single-family home sales came in at 593,000 in September. This is a 3.1% from 575,000 in August and 29.8% from 457,000 in September of last year.
However, economists expected the increase.
“New home sales came in as expected,” Tian Liu, Genworth Mortgage Insurance chief economist. “We see tremendous growth potential in new home sales as housing demand continues to grow and a continued shortage of newer-vintage homes.”
“The limiting factor to that growth will be the limited supply of land and labor, and homebuilders focus on higher price segments,” Liu said.
A former chief economist of Fannie Mae agreed.
“Today’s release showed an increase in new home sales, which was in line with the improved sales and homebuyer traffic readings from the NAHB/Wells Fargo Housing Market Index,” Nationwide Chief Economist David Berson said. “Demand for new homes remains strong in response to employment growth, wage gains, positive demographics and mortgage rates near all-time lows.
Not everyone, however, is so optimistic.
“It might be tempting to see some strength in the September new home sales data, given the decent growth from August,” Zillow Chief Economist Svenja Gudell said. “But in reality, August data was revised sharply downward, and September's numbers – 593,000 sales – are pretty mediocre and well below the 800,000-to-1 million sales needed to really move the needle and help re-balance the housing market between buyers and sellers.”
The median home price increased significantly from August’s $284,000 to $313,500. The average home price also increased significantly from $353,600 to September’s $377,700.
The seasonally adjusted estimate of new homes for sales at the end of September increased to 235,000, representing 4.8 months of supply at the current sales rate. This is up from August’s 4.6 months’ supply.
“New homes comprised 11.8% of all home sales in September, increasing for the seventh straight month,” Trulia Chief Economist Ralph McLaughlin said. “As new construction continues its upward march, we should expect the share to increase accordingly.”
“While new home sales represented about 11.8% of all sales, it’s still less than half of the pre-recession average of 23.6%,” McLaughlin said. “Clearly, there is still much potential for new housing to relieve inventory-constrained buyers.”
Meanwhile, First American Chief Economist Mark Fleming recently said in an interview with HousingWire at the Mortgage Bankers Association's Annual Convention & Expo in Boston that in fact, when adjusting for inflation and the amount of purchase power provided by low interest rates, home prices actually dropped in the past 16 years, giving more consumers the ability to buy a home.
“Contrary to popular opinion, housing isn't getting more expensive,” Fleming said. “In fact, on a purchasing-power adjusted basis, housing is becoming more affordable.”