Sales of new U.S. single-family homes increased to the highest level in nearly 1-1/2 years in September as buyers rushed in to take advantage of a decline in mortgage rates. New home sales jumped 4.1% to a seasonally adjusted annual rate of 738,000 units last month, the highest level since May 2023, the Commerce Department's Census Bureau said.
The sales pace for August was revised down to 709,000 units from a previously reported 716,000 units. Economists polled had forecast new home sales, which account for more than 15% of U.S. home sales, climbing to a rate of 720,000 units.
New home sales are counted at the signing of a contract. They advanced 6.3% on a year-on-year basis in September. Mortgage rates fell in September, dropping to more than a 1-1/2-year low by the end of the month as the Federal Reserve began cutting interest rates.
They have, however, risen over the past three weeks as solid economic data, like retail sales and annual revisions to national accounts, forced traders to abandon hopes for another 50-basis-point rate cut from the U.S. central bank next month.
The Fed's "Beige Book" showed "uncertainty about the path of mortgage rates kept some buyers on the sidelines, and the lack of affordable housing remained a persistent problem in many communities" in early October. New home sales rose in the Northeast and the densely populated South. They, however, fell in the Midwest and were unchanged in the West.
The median new house price was unchanged at $426,300 in September from a year earlier. The inventory of new homes increased in September to 470,000, near levels last seen in early 2008, from 468,000 units in August.
At September's sales pace it would take 7.6 months to clear the supply of houses on the market, down from 7.9 months in August.
