New Home Sales in the U.S. Reach 15-Month High

In September, new home sales in the United States climbed to their highest level in nearly a year and a half. Buyers rushed to take advantage of a dip in mortgage rates.

This led to a 4.1% increase in sales, bringing the seasonally adjusted annual rate to 738,000 units. This marks the highest level since May 2023, according to the Census Bureau’s report from the Department of Commerce released on Thursday.

August’s sales figures were revised downward to 709,000 units from the previously reported 716,000. Economists surveyed by Reuters had predicted new home sales, which account for over 15% of total U.S. home sales, would rise to a rate of 720,000 units.

New home sales are recorded when contracts are signed. In September, they increased by 6.3% compared to the previous year.

Mortgage rates decreased in September, reaching their lowest point in a year and a half by the end of the month as the Federal Reserve began cutting interest rates.

However, rates have risen over the past three weeks due to strong economic data. Factors like retail sales and annual national account revisions have contributed to this increase.

U.S. Housing Market Insights

These factors led traders to abandon hopes for another 50 basis-point cut by the U.S. central bank next month.

The Federal Reserve’s “Beige Book” revealed on Wednesday that “uncertainty about the path of mortgage rates kept some buyers on the sidelines.”

It also noted that the lack of affordable housing remained a persistent issue in many communities. This issue was still evident at the beginning of October.

The median price for new homes held steady at $426,300 in September compared to the previous year. The inventory of new homes rose to 470,000 units in September from 468,000 units in August, levels not seen since early 2008.

At September’s sales pace, it would take 7.6 months to deplete the current supply of homes on the market, down from 7.9 months in August.

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