Sales of newly built, single-family homes posted a 5.7% gain to a seasonally adjusted annual rate of 313,000 units in September — their fastest pace in five months — according to government data released Oct. 26.
Sales gained 11.2% in the South and 9.7% in the West, but dropped 4.2% in the Northeast and 12.2% in the Midwest.
While some in the media attributed the sales gain to builders cutting home prices, it’s more accurate to say that a large portion of the homes sold in September were entry-level units targeted to first-time buyers. After all, first-timers are driving the marketplace right now because they do not have to sell an existing home.
In the National Association of Home Builders’ press release reacting to the latest numbers, NAHB called attention to the fact that such entry-level buyers are particularly dependent upon federal policies and programs that support homeownership such as the mortgage interest deduction and low downpayment mortgage options that have been threatened by recent government proposals.
Meanwhile, although 313,000 units is still quite low by historic standards, it is on par with NAHB’s forecast for the overall number of new-home sales this year and is an encouraging sign of an anticipated broader recovery over the course of next year. Meanwhile, builders have aided the prospects for recovery by refraining from building new product in areas where there is an oversupply of existing units.
According to the latest figures, the inventory of new homes for sale held at an all-time low of 163,000 units in September, representing a relatively modest 6.2-month supply at the current sales pace. View NAHB’s press release or the government’s full report online. Contact:MondayMorningQuestions@nahb.org.