Sales of newly built homes in the US slowed for the first time in five months, retreating from a 13-year high.
New home sales came in at a seasonally adjusted annual rate of 959,000 single-family houses in September, the Census Bureau said on Monday. That was down 3.5 per cent from a revised 994,000-unit pace in August, which was the strongest level since December 2006. Economists had expected new home sales to top 1m last month.
The US housing market has helped lead the economy’s rebound from the worst of the coronavirus-fuelled crisis in the spring, as buyers seek out roomier dwellings during the pandemic and capitalise on record-low mortgage rates. Existing home sales – which account for the majority of transactions – hit a fresh 14-year high in September, their fourth straight month of growth.
Although demand is strong, housebuilders are facing cost pressure from rising lumber prices. Economists have also cautioned that some budget-conscious buyers may be priced out of the market.
The median price for new homes sold last month was $326,800, up 3.5 per cent year on year.
“Bottom line, inventory is most needed in the under $300k price range but that is where the margins are the slimmest. As most of the buyers here are first time, they are very sensitive to higher prices notwithstanding the mitigation of lower rates,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.
There were 284,000 new homes for sale at the end of the month on a seasonally adjusted basis, compared with 282,000 in August. At the current sales pace, the sector has 3.6 months’ worth of supply, up from 3.4 months in August.
“The shortage of homes for sale, along with strong homebuilder sentiment and lean inventories of existing homes, should support new home construction even if the pace of sales cools in the months ahead,” analysts at Oxford Economists said.
They estimated that new home sales will moderate in the fourth quarter, citing a “weak labour market” and a rise in Covid-19 cases.
New home sales in September fared worst in the northeast, which was down 28.9 per cent versus the prior month. Sales in the Midwest and south fell 4.1 per cent and 4.7 per cent, respectively. The west bucked the downward trend, with sales up 3.8 per cent.