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Homebuyers have stayed away from new homes, at least according to the data released by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, for September.
The latest new home sales report released by the agencies revealed that the sale of new single-family homes fell 5.5 percent month-over-month to 553,000. They were 13.2 percent below September 2017's sales, which were estimated at 637,000.
According to Robert Dietz, Chief Economist at the National Association of Home Builders the fall in sales, "marks a notable retreat from the recent, modest growth trend that had been in place due to solid economic conditions and unmet demographic demand but constrained by rising construction costs due to labor access issues, building material pricing and rising regulatory costs."
A possible reason for the falling sales according to Danielle Hale, Chief Economist Realtor.com were the rising prices and mortgage rates that "knocked out some buyers and spooked others into waiting to see if mortgage rates reverse or prices decline—even though both the outcomes are unlikely."
Affordability is also falling as "a fixed monthly payment translates into less borrowing capacity at higher rates, down 10% since the same time last year," said Tendayi Kapfidze, Chief Economist, LendingTree.
The report also revised its earlier new home sales estimates from June to August, "which means that there were fewer new home sales than we previously thought through those months," Hale said. " Instead of turning around in August as first estimated, new home sales continued slowing, a trajectory that hasn’t changed in September."
The report said that the median sales prices of new homes sold during the month stood at $320,000 against an average sales price of $377,000. Inventory though, inched up with 327,000 new residences available for sale at the end of September, representing a supply of 7.1 months at the current rate of sales.
"Instead of taking advantage of reduced competition in the fall, buyers seem to be hibernating, marking an earlier end to the home buying season than we’ve seen in recent hotly competitive years," Hale said.
