New single-family home sales in September 2015 fell dramatically to a seasonally adjusted annual rate of 468,000, down 11.5 percent from the revised August rate of 529,000, according to estimates released jointly Monday by the U.S. Census Bureau and HUD.
The data also showed that the September rate is 2.0 percent above the September 2014 estimate of 459,000.
“The new home sales report covering September released today shows a rate well below the consensus estimate and indicates that real issues emerged late this summer in the new homes market, questioning the supposedly strong growth signals that were previously interpreted by many," said Jonathan Smoke, Realtor.com chief economist. "Last year we picked up momentum in the late summer and fall. This year seems to be the opposite—we are losing momentum."
The Bureau and HUD also found that the median sales price of new houses sold in September 2015 was $296,900, while the average sales price was $364,100.
"That is an important clue as to why growth seems to be stalling out: the median new home price had been declining since the end of last year, which is what we would need to see if builders were aiming to grow sales to first time buyers by providing more affordable, entry-level homes," Smoke explained. "However, the shift up this summer and fall reflects that few builders are able to offer product to first-time buyers."
At the end of September, the seasonally adjusted estimate of new houses for sale was 225,000, representing a supply of 5.8 months at the current sales rate.
According to the data, none of the regions saw any increase from August. The Northeast and Midwest regions declined 61.8 percent and 8.3 percent from August to September, respectively. Meanwhile, the Southern and Western regions dropped 8.7 percent and 6.7 percent, respectively.
Smoke concluded that "The stock market calmed down in late September so new home sales could recover later this fall, but there is a ceiling to how much growth we could see in the new home market as long as builders can’t address the first-time buyer market," Smoke concluded. ”
Just last month, HUD and the U.S. Census Bureau jointly announced that new residential sales reached a seasonally adjusted annual rate of 552,000 in August 2015, the highest level since February 2008.
The report showed that sales increased 5.7 percent above the revised July rate of 522,000 and 21.6 percent above the August 2014 estimate of 454,000.
"The steady, albeit modest, progression of new home sales reflects the steady increase in economic improvement, in job additions and consumer confidence," said David Crowe, chief economist and SVP, NAHB. "Home buyers are taking advantage of historically low mortgage rates, and pent up demand from years of a slow housing recovery."
The seasonally adjusted estimate of new houses for sale at the end of August was 216,000, representing a supply of 4.7 months at the current sales rate.
"A faster sales pace and difficulties acquiring buildable lots and labor have constrained builders’ ability to respond to growing demand," Crowe said. "However, the single largest constraint has been the lack of demand and the slow resale market which is the source of most new home buyers."
Source: U.S. Census Bureau/HUD