September Sales Show Progress on Reducing New-Home Inventory
Sales of new single-family homes rose 4.8% in September, recovering a portion of the substantial ground they lost in the previous month, according to data released by the U.S. Commerce Department on Oct. 25. Sales reached a seasonally adjusted annual rate of 770,000 units following major downward revisions to figures for the previous three months.
“While tough conditions remain in the nation’s housing markets, home builders are taking decisive action to reduce inventories through special sales incentives and sweetened deals,” said NAHB President Brian Catalde. “We’re pulling out all the stops to entice potential buyers back into the market, and today’s report suggests that those efforts are bearing some fruit.”
“Given the substantial downward revisions to home sales numbers for June, July and August, it must be said that this is still a fundamentally weak report,” noted NAHB Chief Economist David Seiders. “Moreover, the large sales gains reported in the West region are highly suspicious, given the results of our own builder surveys and large downward movements in existing-home sales in that region.”
“On the positive side, builders do seem to be making progress on reducing the substantial overhang of unsold units on the market, according to the latest figures,” Seiders said.
The inventory of new homes for sale edged down for a sixth consecutive month in September to 523,000 units as builders cut back on the pace of housing starts and aggressively stepped up sales incentives. The inventory overhang amounts to an 8.3-month supply at the current sales pace, still high on a historical basis but down from a nine-month supply in August.
Regional numbers for new-home sales, which can display significant month-to-month volatility, showed a 37.7% gain in the West, a marginal 0.5% gain in the South and declines of 6.6% and 19.5% in the Northeast and Midwest, respectively.
Seiders noted that there’s still downward momentum in the single-family housing market, and the reported increase in new-home sales for September should not deter the Federal Reserve from enacting another interest rate cut at the Oct. 30-31 Federal Open Market Committee meeting.
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Free NAHB Kit Gives Builders Back-to-Basics Tips in Navigate the Slowdown
What was once expected to be a relatively mild housing slump following three years of record new home construction and sales has given way to a significant downturn.
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