New Home Price Drops to 31-Month Low as September Sales Slip

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Pace of contracts for new home sales EDGED DOWN 0.7 percent in September to a seasonally adjusted annual rate (SAAR) of 701,000;
  • The August sales pace originally reported as 713,000 was REVISED DOWN to 706,000
  • The inventory of unsold new homes DIPPED 2,000 in September to 321,000;
  • The months’ supply of new homes for sale REMAINED at 5.5 in September;
  • Median price of a new home TUMBLED $25,800, or 7.9 percent, from August to $299,4000. Year-year the median price of a new home is DOWN 8.8 percent or $28,900.

Trends:

  • The sales pace for new single-family homes fell for the fourth time in the first nine months of 2019 and the sixth time in the last 12 months;
  • The number of homes for sale is at its lowest level since August 2018
  • The median price of a new home fell to its lowest level since February 2017.

Data Source: Census Bureau and Department of Housing and Urban Development

Image result for new home sales

The median price of a new single-family home fell to its lowest level in 31 months, February 2017 when it was $298,000, the Census Bureau and Department of Housing and Urban Development reported jointly Thursday.

The price drop didn’t even boost sales which edged down month-month for the fourth time this year though year-year sales are up.

The disappointing government report underscores a troubled housing market. Earlier this week the National Association of Realtors reported existing home sales fell 2.2 percent in September. (The two reports are not precisely comparable however: the NAR data is based on closings and the government statistics track contracts for sale, The NAR report on contracts, pending home sales, is scheduled for release tomorrow.)

The new home sales report is consistent with other data reported by the two agencies showing a decline in permits and starts for single-family homes. In addition, for September the Census Bureau and HUD reported builders had completed 852,000 new homes (seasonally adjusted annual rate) including homes built on speculation and to order. The number of completions was just 151,000 more than sales in September, the smallest “gap” between sales and completions since November 2017 when builders completed just 69,000 homes more than were sold. Since then the average “gap” has been 223,000 more homes completed than sold per month.

The new report adds to troubles in the housing sector which has been hit with rising expenses due to higher tariffs on materials.

Despite the disappointing sales report, builder confidence remains high. According to the National Association of Home Builders, the Housing Market Index which tracks confidence rose three points in the beginning of October to its highest level in 20 with builders reporting a jump in buyer traffic.

The inventory dropped about 45,000 (8.2 percent) from May through November 2007, compared with the decline of 21,000 (6.1 percent) in the most recent seven-month period.

Meanwhile Thursday, Freddie Mac reported the average rate for a 30-year fixed-rate mortgage last week was 3.75 percent, up from 3.69 percent one week ago.

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.

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