September new home sales were virtually unchanged from a revised August report. At an annual rate of 467,000, new home sales were the highest since July 2008. The August number was revised downward after an unusually large and unsustainable spike. Given the month-to-month variation in the series, a quarterly average may be clearer. The third quarter finished at 446,000 up 4.4% from the second quarter at 427,000 and the second quarter was within 1 percent of the first quarter.
Inventories continue to rise as builders prepare for continued demand improvements. Total inventory rests at 207,000, up 13% from the same time last year. Of that inventory, only 50,000 are completed homes ready to move in. Builders continue to keep options for finishes and final touches open for the buyer. Most of the new homes for sale are still under construction awaiting the final choices of the ultimate buyer.
Median sales price fell $10,000 or 4% to $259,000 but the decline was not due to a fall in individual home prices. Rather, the composition of the homes sold changed. In September 2013, 28% of the homes sold were priced under $200,000 but that share rose to 31% in September 2014. The share above $400,000 also dropped slightly across the year. This is also an encouraging sign as some first time home buyers begin to creep back into the market.
The third quarter sales pace is exactly in line with the NAHB forecast as we look to continued improvement in employment and consumer confidence while mortgage rates and affordability remain in reach of more potential home buyers.