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In the latest data from the U.S. Census Bureau and the Department of Housing and Urban Development, sales of new single-family houses saw a significant monthly growth of 12.3% in September. New Residential Sales data reports on the volume of new single-family home sales and other metrics, such as new home prices and supply, illustrating the sentiment of homebuyers and builders.
September’s figures were a substantial 33.9% higher than last year, reaching a 19-month high in the face of higher mortgage rates. As a Harvard Joint Center for Housing Studies article notes, historically tight inventories for existing homes have led to surges in the market's share of newly built homes. Additionally, with higher prevailing rates, homebuilders are now offering more incentives, such as rate buy-downs to attract buyers.
With builders offering buyers incentives that funnel demand into new homes, builders are trying to maintain momentum by making monthly payments more affordable for new homes and shifting towards building smaller homes. Census data reflects the median new house price in the U.S. dropping 3.3% from August, a 12.3% drop from a year ago.
While single-family starts increased in September, the supply of new housing is still in decline as new housing inventories reach a 6.9-month supply, a 10.3% decrease from August and a 28.9% drop from last year. As mortgage rates climb to the high 7s, builders will continue aligning incentives with buyer interests.
New home starts indicate strong demand despite existing home shortages. Builders are also adjusting prices and floor plans in response to rising rates. However, dwindling supply and higher rates, together, may continue to push buyers to delay homeownership and favor rentals.
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