Sales of new homes in the U.S. unexpectedly tumbled 3.5 percent in September to a seasonally adjusted annual rate of 959,000, data released Monday showed.
Despite the monthly decline, sales are up 32.1 percent above the year ago level, the data from the Census Bureau and the Department of Housing and Urban Development show.
August’s figures were revised down to an annual pace of 994,000 from 1.011 million.
The numbers fell short of projections by economists. The consensus forecast was for sales to come in above one million.
— U.S. Census Bureau (@uscensusbureau) October 26, 2020
Extremely low mortgage rates and a surge in demand for single-family homes has lifted the residential real estate market this year. Demand for commercial properties, from offices to rental apartments, is down in many big cities as remote working, closed schools, rising murders, and shuttered urban amenities have sent Americans searching for houses in the suburbs.
New homes account for about 14 percent of the housing market. But because homebuilding is labor-intensive and new homes need to be outfitted with consumer goods, the category punches above its weight-class when it comes to the broader economy.
The median selling price rose 3.5 percent from a year earlier to $326,800, an indication that demand for new homes remains very high. Supply has struggled to catch up with demand for homes after the building industry shutdown across much of the country this spring. A shortage of existing homes on the market is pushing some buyers into the new home market.
The supply of new homes moved up a bit, indicating some easing of the extremely tight buying conditions seen over the summer. At the current pace of sales, there are 3.6 months worth of new homes on the market, up from 3.4 in August. The August figure was the lowest ever recorded in data going back to 1963.
Purchases fell 4.7 percent in the South, 4.1 percent in the Midwest, and 28.9 percent in the Northeast, the smallest and most volatile of the four regions. Sales rose 3.8 percent in the West.