September New Home Sales: How Long Can the Good Times Roll?

• September new home sales fell 3.5% from August but were up 32.1% from a year ago, to 959,000 (SAAR), according to the U.S. Census Bureau.
• The median sales price of new houses sold in September 2020 was $326,800, up 1.4% from August and 3.5% from September 2019.
• There were 3.6 months' of supply of new homes available for sale in September.

September new home sales fell somewhat short of expectations and represent a small decline from prior months -- but at just shy of 1 million sales for the month (at a seasonally adjusted annual rate), its clear the new home market overall remains very strong even given this recent moderation. Year-to-date, new home sales are up 16.8% from the same nine-month period in 2019. A favorable mortgage interest rate environment, an enduring desire for brand-new homes and a longstanding shortage of existing homes available for sale continue to pay dividends for home builders. And builders are clearly taking notice – their expectations for sales volume over the next six months are the highest they've ever been. The question now is whether these goods times can continue and for how long. A lasting inventory drought matters less for new home sales than for the re-sale market – roughly two-thirds (67.6%) of new homes purchased in September weren't even been built yet. But broader economic and social factors including persistently high unemployment and the spread of the coronavirus represent considerable potential constraints for new home sales. For now, though, these issues don't seem to be much of a threat to what continues to be a very solid run for new home sales.