By Mark Lieberman
Managing Director and Senior Economist
- Pace of contracts for new home sales IMPROVED 3.1 percent in September to 593,000 (Seasonally Adjusted Annual Rate);
- Median price of a new home INCREASED 6.7 percent in September, $19,700, to $313,500;
- Number of homes for sale SLIPPED 1,000 to 235,000;
- Months’ supply of new homes for sale FELL to 4.8 months in September.
New home sales, which skidded 6.6 percent in August after 12.7 percent increase in July, recovered some in September.
The 3.1 percent September gain, reported by the Census Bureau and Department of Housing and Urban Development http://www.census.gov/construction/nrs/pdf/newressales_201609.pdf confirmed the jump in builder confidence in September as reported by the National Association of Home Builders (NAHB). The NAHB’s Housing Market Index jumped six point from 59 to 65 in September, the largest month-month increase since June 2015.
Builders seemed to realize the improvement wouldn’t last and the HMI slipped to 63 in October.
But the new home sales report was still good news. Even better news for builders was the 6.7 percent increase in the median price of a new home – to $313,500 – the highest level since June. In the 12 months ended in August, the median price of a new home averaged $304,917, so the September bump was good news indeed.
According to the Census-HUD report, 57 percent of new homes sold in September (and in August) had price tags between $200,000 and $399,999 compared with52 percent in 2015 and 2014.
The government report tracks contracts for new homes, not all of which will close. By contrast, last week’s report on existing home sales from the National Association of Realtors, showed a 3.2 percent increase in closed transaction. The NAR’s pending home sales report, the equivalent of Wednesday’s government report, will be released Thursday.
The improvement in contracts followed data showing improved earnings in September and continued low interest rates. According to Freddie Mac’s weekly mortgage rate survey, the 30-year fixed-rate mortgage increased five basis points to 3.52 percent, the first week in over four months rates have risen above 3.50 percent
Hear Mark Lieberman on P.O.T.U.S. (Sirius-XM 124) Friday at 6:20 am Eastern Time. You can follow Mark Lieberman on Twitter at @foxeconomics.