New house sales in the US jumped to a 19-month high in September as the annual median house price dropped by the most since 2009, as per the government data released this week.
Sales of new single-family houses increased to an annual rate of 759,000 last month, seasonally adjusted, the Commerce Department said in a statement.
This was the fastest pace since February 2022, while August’s figure was also revised slightly upwards to 676,000, according to official figures.
The median sales price of new houses sold slipped, however, to $418,800 in September.
A lack of inventory for existing homes has raised demand for new properties, despite high mortgage rates that came about after the US Federal Reserve rapidly lifted the benchmark lending rate to fight inflation.
September’s sales figure this year is around 34% higher than that of the same period a year ago.
The “shift in purchases towards new homes, due to the lack of existing home supply, is continuing to offset extremely weak aggregate housing demand,” said Kieran Clancy, senior US economist at Pantheon Macroeconomics.
But he expressed caution over a large margin of error in the data.
Clancy noted that the jump in sales clashes with a ‘collapse in homebuilders’ confidence and the flattening trend in single-family building permits.”
While sales have gone up, he expects they will not do so for long.
Last month, sales of existing homes, which form the majority in the market, hit the lowest rate in 13 years, according to industry data.
“While new home sales may continue to be more resilient than existing home sales, we expect they will weaken in the fourth quarter,” said economist Nancy Vanden Houten of Oxford Economics in a note.
This is due to 23-year-high mortgage rates and a slowing economy and labor market, she added.
As of October 19, the popular 30-year fixed-rate mortgage averaged 7.6% according to home loan finance company Freddie Mac. This is the highest in more than two decades, and markedly above the level a year ago.