U.S. purchases of new homes unexpectedly surged in September to the highest level in a decade as activity accelerated in the South after hurricanes Harvey and Irma, according to government data Wednesday.
Highlights of New Home Sales (September)
Single-family home sales rose 18.9% month-to-month to a $667,000 annualized pace (est. 554,000), the strongest since October 2007. Purchases in the U.S. South surged 25.8% month-to-month to a 405,000 rate, the fastest since July 2007. Sales in other regions also advanced. Median sales price increased 1.6% year-to-year to $319,700. The supply of homes at current sales rate dropped to 5 months from 6 months; 279,000 new houses were on the market at the end of September.
Key Takeaways
The biggest monthly gain in home sales since January 1992 reflected an increase in the number of properties in which construction hadn't yet started. That level of 236,000 was the most since January 2007 and signals residential building will strengthen in coming months as firms get busy filling orders.
While the report showed particular strength in the U.S. South, possibly a reflection of increased demand following the storms, sales were firm in other parts of the country. A steady job market and low mortgage costs will help keep the housing recovery on track.
The new-home sales figures are volatile on a month-to-month basis. The Census Bureau had said in a special notice last month that while data aren’t available at the state or local level, areas in Texas and Florida affected by Harvey and Irma accounted for about 14 percent of single-family housing units authorized by permits in 2016. If no sales information is received by the government, the units’ status was assumed to be unchanged.
New-home sales, tabulated when contracts get signed, account for about 10 percent of the market. They're considered a timelier barometer than purchases of previously owned homes, which are calculated when contracts close and are reported by the National Association of Realtors.
Other Details
Purchases in the Midwest climbed 10.6 percent in September and were up 2.9 percent in the West. Commerce Department said there was 90 percent confidence that the change in sales last month ranged from a 0.1 percent drop to a 37.9 percent increase, underscoring the volatility of the data Report released jointly by the Census Bureau and Department of Housing and Urban Development in Washington