New homes, the hottest sector of the real estate market, got even hotter in September as sales hit the fastest pace in two and a half years.
Sales of newly built, single-family homes rose 5.7 percent to a seasonally adjusted annual rate of 389,000 units in September, according to newly released figures from HUD and the U.S. Census Bureau. This is the fastest sales pace recorded since April of 2010.
“Combined with consistent, positive reports on housing starts, permits, prices and builder confidence in recent months, today’s data provides further confirmation that a gradual but steady housing recovery is underway across much of the nation,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. “Consumers who have been on the sidelines during the past few years are deciding now is the time to go forward with a new-home purchase, assuming they can qualify for a good mortgage under today’s exceedingly stringent guidelines.”
“New-home sales this year have consistently and significantly out-paced their year-ago levels as favorable interest rates, rising prices and improving consumer confidence have driven demand higher,” noted NAHB Chief Economist David Crowe. “Meanwhile, despite a small increase in the inventory of new homes on the market in September, the number of completed new homes for sale is now at an all-time low and the month’s supply is at its tightest since October 2005. This is an indication that builders continue to have a tough time obtaining construction credit, even as demand for new homes increases.”
Three out of four regions registered substantial gains in new-home sales this September, including the Northeast’s 16.7 percent increase, the South’s 16.8 percent increase and the West’s 3.9 percent increase. The Midwest was the exception to the rule, with a 37.3 percent decline.
Meanwhile, the inventory of new homes for sale inched slightly upward to a still-low 145,000 units in September, which is a 4.5-month supply at the current sales pace.