US New Home Sales Surge as Prices Plummet



The US housing market has witnessed a rollercoaster ride for new home prices in recent months. After a dip in the spring, prices gained momentum during the summer, only to come tumbling back down in September.

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The US housing market has witnessed a rollercoaster ride for new home prices in recent months. After a dip in the spring, prices gained momentum during the summer, only to come tumbling back down in September.
 

US New Home Sales Surge as Prices Plummet | ogusyis

However, despite the price fluctuations, sales of new homes have surged, driven by limited options in the resale market. These developments reflect the ongoing challenges and opportunities in the housing sector.

Price Fluctuations and All-Time High

According to the latest Census data, the national median sale price for new homes in September was $418,800, a decrease from $433,100 in the previous month. This represents a significant 12.3% decline compared to September of the previous year when median new home prices reached $477,700. Notably, just a month earlier in October 2022, new home prices reached an all-time high of $496,800, even amidst mortgage interest rates surpassing 7%.

Sales Surge Amidst Limited Resale Options

As resale options become scarce, buyers have increasingly turned to the new home market. In September, sales of new single-family homes reached a seasonally adjusted annual rate of 759,000, marking the highest level in 19 months. This surge in sales reflects a 12.2% increase compared to the previous month's figure of 676,000. While the current sales rate falls between the pandemic-era low of 543,000 in July 2022 and the high point of 1.03 million in August 2020, it represents a positive trend for the market.

Inventory and Building Challenges

Despite the increased sales, the inventory of new homes remains relatively healthy. In September, there was a 6.9-month supply of new homes, which experts consider to be indicative of a balanced market. However, it is important to note that new home inventory has been declining for a significant portion of the past year. This decline is evident when compared to the 7.7-month supply in August and the 9.7-month supply observed a year ago. The slower pace of construction has thus failed to keep up with the growing demand, leading to a decrease in available inventory.

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The US housing market has experienced a series of ups and downs in recent months, particularly in the new home sector. The fluctuations in prices, with a steep decline in September, have coincided with a surge in sales as buyers seek alternatives to the limited options in the resale market. Although the inventory of new homes remains relatively healthy, the declining supply highlights the challenges faced by the industry in keeping up with demand. As the market continues to evolve, it will be crucial for builders to address these supply constraints and capitalize on the sustained interest in new home purchases.

US New Home Sales Surge as Prices Plummet

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