New Home Sales Hit 2.5 Year Peak

By Stevie Duffin Updated on 12/14/2012

By Daniel Duffield

Due in part to the historically low mortgage rates, September saw a 5.7% rise in new home sales in terms of single-family residences, reaching a seasonally-adjusted annual level of 389,000 units. During the announcement, however, the U.S. Census Bureau and the Department of Housing and Urban Development (HUD) amended its former measurements for August from 373,000 down to 368,000 units. For a year over year comparison, the September figure has illustrated a 27.1% increase from September 2011 statistics which measured 306,000 units. With no seasonal adjustment, sales averaged 31,000 units, increasing from 24,000 units in September 2011.

Considering location, sales increased in three of the four U.S. regions, with the Midwest standing alone as the region that saw a lower rate of sales, at 37.3% lower than August new home sales and 31.9% lower than a year previous. For the Northeast, sales increased 16.7% from last month, with a drastic 75.0% rise from last year. In the South, sales rose 16.8% from August statistics, with a 24.3% increase from September 2011. The Western region also saw an increase in new home sales, rising 3.9% from August and 62.1% from September 2011.

Furthermore, the increase in home sales has resulted in a rise in the median home sales price, with new homes sold in September at a median of $242,300 as compared with $217,000 from a year earlier. Average price similarly rose, from $255,400 to $292,400.

Moreover, a total of 145,000 new homes remain on the market at the end of September, lower than September 2011 measurements of 160,000. This latest inventory demonstrates a 4.5 month stock, dropping from the 6.3 month backlog from a year ago. With current interest rates persisting at advantageous lows, home purchase has become increasingly attractive as less borrowers turn to renting.