September Sees Surging New Home Sales in the US

New home sales in the United States surged 12.3% in September to a seasonally adjusted annual rate of 759,000, the fastest pace since February 2022 and exceeding expectations. Existing home sales have been declining due to an inventory and affordability crunch caused by high mortgage rates, with homeowners reluctant to sell and buy at higher rates. The average rate for a 30-year fixed-rate mortgage was 7.63% last week, and with another Fed interest rate hike expected, rates are not anticipated to drop soon. New construction has become an appealing alternative, attracting buyers frustrated by low supply, but affordability concerns persist. The south region saw the highest increase in new home sales, driven by land availability, population and job growth, and lower cost of living. The inventory picture is better for new construction homes, with a supply of 6.9 months compared to 3.4 months for existing homes.