The U.S Census Bureau and the U.S. The Department of Housing and Urban Development recently released the latest September 2022 residential sales statistics. It has been found that new home sales have exceeded expectations. While monthly supply increased in this report, preceding numbers were all revised lower, and sales remain historically low. The housing market has yet to have a large credit sales boom like the one that occurred during the housing bubble years, therefore we can’t expect a similar massive sales crash starting from such historic highs. This is a positive notion since the recession is more controllable: sales were not inflated by a credit boom fueled by unusual loan debt structures, thus finding the bottom level in sales is more achievable.
New Home Sales
According to estimates provided jointly today by the U.S. Census Bureau and the National Association of Realtors, sales of new single-family homes in September 2022 will be at a seasonally adjusted annual pace of 603,000. This is 10.9 percent (15.2%)* lower than the modified August estimate of 677,000 and 17.6 percent (15.9%) below the September 2021 forecast of 732,000.
It’s a relief that we’re not at the peak of the housing bubble. This is not to say that sales cannot decline further from here, especially with mortgage rates rising. However, it demonstrates that builders are more adept at managing supply and demand instabilities than they were during the housing boom years. When mortgage rates declined from 6.25% to 5%, we witnessed some data stabilization.
In September 2022, the median sales price for new houses sold was $470,600. The median sale price was $517,700. For sale inventory and month’s supply, the seasonally adjusted assessment of new residences for sale was 462,000. At the existing sales pace, this equates to 9.2 months of supply. With the decrease in activity, it looks like many buyers were simply priced out of these higher figures, and this could be gradually leveling off.
The Bottom Line
The latest figures are volatile; the study showed 90% confidence that the shift in sales varied from a 26.1% fall to a 4.3% increase. It will be critical to regularly monitor conditions since there is likely to be tremendous pent-up interest for when conditions stabilize. As we wait and see what happens in the housing market in the coming years, it is best to rely on the knowledge of your local experts to stay up to date on what to expect in this market.
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