New Home Sales Rise, and Prices Rocketed Higher in September

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The U.S. Census Bureau and the Department of Housing and Urban Development reported Wednesday morning that sales of new homes in September rose to a seasonally adjusted annual rate of 593,000, an increase of 3.1% above the revised August rate of 575,000 and an increase of 29.8% compared with the September 2015 rate of 457,000. The consensus estimate from a survey of economists expected a rate of around 601,000. The August rate was revised downward by 34,000.

At the peak in 2005, new home sales posted a seasonally adjusted annual rate of nearly 1.4 million.

The Census Bureau also reported that the median sales price for new homes sold in September rose by a whopping $29,500 from $284,000 in August to $313,500, and the average sales price rose by $24,100 to $377,700. At the end of September the number of new homes for sale totaled 235,000 and represented a supply of 4.8 months at the current sales rate.

In September, 43% of the estimated 46,000 monthly sales were sales for homes priced at less than $300,000. The percentage is 11 points lower than the August rate. Sales of homes priced between $300,000 and $399,999 rose by five points to 24% of all sales. Sales of homes in the range of $400,000 to $499,999 rose fell from 13% of sales to 11%, and sales rose from 10% to 12% for homes sold in a range of $500,000 to $749,999. Home sales for properties priced above $750,000 accounted for 5% of all new home sales in September, the same as the August rate.

The increase in sales of higher-priced homes is the primary factor in the sharp rise in median and average prices in September. That likely means that there were not a lot of first-time buyers moving into new homes last month.