September New Home Sales: Stretching to Satisfy Demand

• September new home sales rose 14% from August to 800,000 (SAAR), down 17.6% from September 2020, according to the U.S. Census Bureau.
• The median sales price of new houses sold in September 2021 was $408,800.
• The seasonally‐adjusted estimate of new houses for sale at the end of September was 379,000, a supply of 5.7 months at the current sales rate.

New home sales in September surged 14% above the previous month’s pace, the biggest monthly increase since July 2020 and a sign that homebuilders are stretching to satisfy historically high housing demand. But this growth comes with the caveat that the August report was revised lower. Builder momentum may be hard to maintain. Housing starts and permits were both down in the most recent report, and builders are likely coming to terms with limited availability of raw materials and construction labor. Builders have also expressed fears that some of their buyers may be lured to the existing home market, where buying conditions are slowly improving. And rising prices and mortgage rates could drive other buyers away from the housing market altogether.