New Construction Sales Soared, Existing Sales Down In September

New construction saw a boost in September while existing home sales went down.
New home sales increased last month, according to data from the U.S. Census Bureau and the Department of Housing and Urban Development, which reported sales rising by 4.1% to a seasonally adjusted annual rate of 738,000.
At the end of the month, 470,000 new homes were for sale. At the current rate, this represents a 7.6-month supply.
The median sales price of new houses sold was $426,300, while the average was $501,000. Sale prices are falling in some metros as inventory increases, but appreciation remains strong nationwide.
Buyers who jumped into the market as rates cooled to nearly 6% may be just as quick to flee, however. Rates are already moving back towards 7%.
“The increase in new home sales in September was probably supported by the fall in mortgage rates last month,” Ruben Gargallo Abargues, an economist at Capital Economics, wrote in a note. “Rates have rebounded since then, however, which lends support to our view that new home sales will not rise much further.”
Existing home sales, on the other hand, slid in September, down 1% to a seasonally adjusted annual rate of 3.84 million, according to the National Association of Realtors. Sales were down 3.5% YOY.
Though builders are becoming more confident they can sell new construction moving into 2025, many current homeowners are still locked into low rates, keeping existing inventory historically low.
“Home sales have been essentially stuck at around a four-million-unit pace for the past 12 months, but factors usually associated with higher home sales are developing,” said NAR Chief Economist Lawrence Yun.
“There are more inventory choices for consumers, lower mortgage rates than a year ago, and continued job additions to the economy. Perhaps, some consumers are hesitating about moving forward with a major expenditure like purchasing a home before the upcoming election.”
Some Americans are finding they can’t wait any longer to move, however. The inventory of unsold existing homes increased by 1.5% from the month prior to 1.39 million, the equivalent of 4.3 months’ supply at the current monthly sales pace, and 23% YOY.
Home prices are still appreciating, but at a slower pace than the past few years. Yun noted that wage growth is now beating price growth, setting the stage for greater affordability moving forward.