After a surge in the pace of new home sales in July and August, the growth rate of newly built single-family home slowed in September. While still strong, the growth rate of new home sales exceeded construction starts by a historic margin at the end of the summer, necessitating an increase in starts and some slowing of sales.
According to the estimates from the Census Bureau and HUD, sales declined by 3.5% for the month to a 959,000 seasonally adjusted annual rate. However, the September rate was 32% higher than a year ago, as housing demand continues to be supported by low interest rates, a renewed consumer focus on the importance of housing, and rising demand in lower-density markets like suburbs and exurbs.
Looking back to the spring, the April data (570,000 annualized pace) marks the low point of sales for the current recession. The April rate was 26% lower than the prior peak, pre-recession rate set in January. Sales have mounted a historic growth rate since that time.
Sales-adjusted inventory levels marked a third consecutive month below a 4 months’ supply, coming in at 3.6 in September. The count of completed, ready-to-occupy new homes is just 48,000 homes nationwide.
Moreover, sales are increasingly coming from homes that have not started construction, with that count up 47% year-over-year. These measures point to continued gains for single-family construction ahead.
Thus far in 2020, new home sales are higher in all regions. Total new home sales are up almost 17% on a year-to-date basis. Sales are 14% higher in the South, 18% in the West, 26% in the Midwest, and 23% higher in the Northeast.