New Home Sales Surprise With A Jump In September

Sales of newly constructed homes in the U.S. unexpectedly rose 12% in September to the strongest pace since February 2022. Some homebuyers are willing to make purchases despite mortgage rates at the highest level in more than 20 years.

Sales of new single-family houses increased to an annual rate of 759,000 from a revised 676,000 in August, the Census Bureau and the Department of Housing and Urban Development said in a statement Wednesday. Economists surveyed by Reuters expected sales of 680,000 last month.

The number for August was slightly increased from an initial reading for 675,000. Sales jumped 34% from a year earlier.

The average price of new homes fell 3.6% from August to $503,900, according to the report. The seasonally‐adjusted estimate of new houses for sale was at 435,000, which represents a supply of 6.9 months.

The government data seem to agree with comments made Tuesday by PulteGroup, the third-biggest U.S. homebuilder. The company said in its quarterly earnings report that Americans' interest in home purchases remains solid, which helped it increase its profit in the third quarter by 1.7%.

"Fed actions and broader market forces have combined to push interest rates to 20-year highs, but the fundamental desire for homeownership is strong while the supply of houses remains constrained," said PulteGroup President and CEO Ryan Marshall.

The average 30-year fixed mortgage rate stood at 7.63% as of the week ending Oct. 19, marking the sixth consecutive increase and the highest level since December 2000. In comparison, the rate was at 6.94% a year before.

Amid higher mortgage rates, homeowners who secured lower rates have refrained from listing their properties, resulting in reduced inventory of previously owned houses in the market.

The National Association of Realtors said Thursday that the number of existing homes for sales dropped 8.1% in September from a year earlier. Sales fell 15% to the lowest level since 2010.