• September new home sales jumped 18.9 percent from August to 667,000 sales (SAAR), according to the U.S. Census Bureau, the most since October 2007.
• Of the total 106,000-unit sales bump from August, 83,000 of those sales (78 percent) were in the South, pointing to a rebound from Hurricanes Harvey and Irma.
• Inventory of new homes on the market was unchanged from August, at 279,000, but up 15.3 percent year-over-year. The median (seasonally adjusted) sale price was up 3.3 percent from August and 1.6 percent form a year ago, to $315,750 — well below the recent high recorded in July ($330,245).

Now this is the kind of new home sales activity we need and expect to be seeing, especially after what was a pretty weak and disappointing summer selling season made worse by a string of hurricane disruptions. And upward revisions to initially reported summer numbers, however modest, only sweeten the news. Much of this increase was driven by the South and the rebound from Hurricane Harvey, and ought to be taken with some salt as these initial numbers are subject to substantial revisions. But even with those regional distortions, this is the most new home sales we’ve seen overall in a given month since October 2007, and sales would have increased nationwide even if sales in the South had been more in line with trends elsewhere in country. Hopefully this represents a new bar for coming months to clear, though it’s too soon to be overly optimistic. Because while it’s easy to get excited about one month’s worth of data like this, one month of good numbers alone cannot explain the weakness seen in the national new home market over the past few years. We’ve been underbuilding housing in this country relative to demand and simple population growth for years, and that hen is coming home to roost in a big way today – especially at the bottom end of the market. It’s good to see the median sale price of new homes come down somewhat from the highs of this summer, but that may be tough to sustain. Labor and materials costs are rising strongly and will only make building overall more expensive, let alone building profitably at the affordable end of the market, where building is needed most but where builders’ margins are already thin. And a glut of replacement work in the South in the wake of the storms may pull a lot of available construction workers that way, potentially contributing to shortages of workers in other regions. Just getting back to par and erasing the new home debt we’ve accumulated the past few years will require an enormous pickup in building activity nationwide even bigger than what we saw this month, sustained over the next several years or more.