The Commerce Department released a report on Wednesday showing new home sales in the U.S. pulled back sharply in September after unexpectedly skyrocketing in August, although the decrease was smaller than expected.
The report showed new home sales tumbled by 10.9 percent to an annual rate of 603,000 in September after soaring by 24.7 percent to a revised rate of 677,000 in August.
Economists had expected new home sales to plunge by 14.6 percent to a rate of 585,000 from the 685,000 originally reported for the previous month.
The sharp pullback in new home sales largely reflected a steep drop in the South, where new home sales plummeted by 20.2 percent to an annual rate of 356,000.
New home sales in the West also fell by 0.7 percent to a rate of 135,00, while new home sales in the Midwest jumped by 4.3 percent to a rate of 73,000 and new home sales in the Northeast spiked by 56.0 percent to a rate of 39,000.
Meanwhile, the Commerce Department said the median sales price of new houses sold in September was $470,600, up 8.0 percent from $435,800 in August and up 13.9 percent from $413,200 a year ago.
“The rise in prices reflected a shift in the composition of sales toward higher-priced homes,” said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics. “We expect new home prices to come under pressure in the months ahead as builders cut prices to clear inventory.”
The estimate of new houses for sale at the end of September was 462,000, up 1.1 percent from 457,000 at the end of August and up 23.2 percent from 375,000 at the end of September 2021.
The unsold inventory represents 9.2 months of supply at the current sales rate compared to 8.1 months in August and 6.1 months a year ago.
“We look for new home sales to decline further in the months ahead, falling below 500k in Q4 2022 and early next year, before gradually rising in H2 2023,” added Vanden Houten.
Last Thursday, a separate report released by the National Association of Realtors showed a continued decrease in U.S. existing home sales in the month of September.
NAR said existing home sales slid 1.5 percent to an annual rate of 4.71 million in September after falling by 0.8 percent to a revised rate of 4.78 million in August.
Economists had expected existing home sales to slump by 2.1 percent to a rate of 4.70 million from the 4.80 million originally reported for the previous month.
Existing home sales declined for the eighth consecutive month, falling to their lowest level since spring of 2020.
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