PUBLISHED BY THE EL PASO ASSOCIATION OF BUILDERS : NATIONAL , STATE AND LOCAL HOME BUILDING INDUSTRY NEWS
New Home Sales Fall Back as Interest Rates Jump
Rising mortgage rates approaching 7 % along with declining builder sentiment stemming from stubbornly high construction costs and weakening consumer demand pushed new-home sales down at a double-digit rate in September . Following a brief uptick in August , sales of newly built , single-family homes in September fell 10.9 % to a 603,000 seasonally adjusted annual rate , according to newly released data by the U . S . Department of Housing and Urban Development and the U . S . Census Bureau . “ Builders continue to face lower buyer traffic due to declining affordability conditions as the housing downturn continues ,” said Jerry Konter , chairman of the National Association of Home Builders ( NAHB ) and a home builder and developer from Savannah , Ga . “ Builder sentiment has declined for 10 consecutive months . The entry-level market in high-cost areas has been particularly affected , with growing numbers of first-time and first-generation buyers priced out of the market .” “ New home sales are down 14.3 % on a year-to-date basis compared to 2021 ,” said NAHB Chief Economist Robert Dietz .
“ Moreover , sales are now down 1.9 % on the same basis compared to 2019 levels that were prior to the Covid-related changes to interest rates .” A new home sale occurs when a sales contract is signed or a deposit is accepted . The home can be in any stage of construction : not yet started , under construction or completed . In addition to adjusting for seasonal effects , the September reading of 603,000 units is the number of homes that would sell if this pace continued for the next 12 months . Notably , the new home sales data do not incorporate cancellations , which according to NAHB survey data have more than doubled compared to a year ago . New single-family home inventory remained elevated at a 9.2 months ’ supply ( of varying stages of construction ). A measure near a 6 months ’ supply is considered balanced . The count of homes available for sale , 462,000 , is up 23.2 % over last year . Of this total , only 56,000 of the new home inventory is completed and ready to occupy . The remaining have not started construction or are currently under construction . Reflecting rising construction costs , the median new home price in August was
$ 470,600 , up 13.9 % from a year ago . However , NAHB surveys indicate that a quarter of builders are now cutting prices , thus recent months ’ price data reflects a composition change , with sales lost at the low end of the market pushing the median price higher . In September 2022 , there were 20,000 sales priced below $ 300,000 . In September 2021 , sales in this price range totaled only 6,000 . Regionally , on a year-to-date basis , new home sales fell in all four regions , down 8.1 % in the Northeast , 21.2 % in the Midwest , 12.1 % in the South and 17.6 % in the West .