Summer Home Buying Surge Slows in September
New home sales in September dropped for the first time in months. Is this a sign of further declines to come?
According to the latest data from the U.S. Census Bureau, sales of new single-family homes dropped by 3.5 percent in September. While that dip marked the first month-over-month drop in sales since May, new home sales in September were still a massive 32.5 percent higher than in September 2019.
“With sales up 32 percent from a year ago, the demand for new single-family homes remains strong as interest rates are at historic lows,” said Chuck Fowke, chairman of the National Association of Home Builders.
Regionally, the Northwest saw by far the largest percentage drop with new home sales, falling by 28.9 percent. The Midwest and South experienced notably smaller decreases of 4.1 and 4.6 percent, respectively, while the West was the only region where home sales slightly increased in September.
Although these slowdowns could be seen as a sign that the housing market might finally be losing its summer momentum, it’s important to note that on a year-to-date basis, new home sales are running 16.9 percent higher this year than in 2019.
“The pace of new home sales growth over the summer was going to slow given that the gap between sales and single-family construction reached an all-time high in August,” said Robert Dietz, chief economist for the NAHB. “Indeed, September sales of new homes that had not started construction were up 47 percent compared to a year ago.”
It appears that the main challenge for home builders heading into the new year will be keeping pace with demand for new housing, even as that demand begins to decline slightly.
“Looking ahead, builders are already well-positioned in these very markets to deliver homes featuring today’s top desirable amenities: more space, new kitchens, home offices and gyms, as well as outdoor access,” said George Ratiu, senior economist at Realtor.com. “The only challenge for builders is navigating the rising costs of land and building expenses.”