Although new home sales increased in September, continued rising mortgage rates could deplete October’s sales.
New estimates released jointly Thursday by the U.S. Census Bureau and the Department of Housing and Urban Development (HUD) indicate that new residential sales rose in September to a seasonally adjusted rate of 738,000 – 4.1% above August’s revised rate of 709,000 and 6.3% higher than Sept. 2023’s sales rate.
Since then, home sales have continued on the rise and homebuilder sentiment has increased.
Pending U.S. home sales rose 3.5% year over year during the four weeks ending October 20, Redfin has also reported, marking the second-largest increase in three years.
Will Rates Dampen Demand?
Lastly and unequivocally, mortgage rates have risen.
Just Thursday, Freddie Mac reported the 30-year fixed-rate mortgage rate was averaging 6.54%, up 10 basis points from 6.44% the week prior. A year ago at this time, the 30-year FRM averaged 7.79%.
“The continued strength in the economy drove mortgage rates higher once again this week,” Freddie Mac’s Chief Economist Sam Khater pointed out. “Over the last few years, there has been a tension between downbeat economic narrative and incoming economic data stronger than that narrative. This has led to higher-than-normal volatility in mortgage rates, despite a strengthening economy.”
Prices Rising Alongside Rates, Sales
The growth rate of home prices increased for the third month in a row this September.
The median sales price of new houses sold in Sept. 2024 was $426,300. The average sales price was $501,000. The seasonally-adjusted estimate of new houses for sale at the end of Sept. was 470,000, representing a supply of 7.6 months at the current sales rate.
October sales data is expected to be released Nov. 26.
