New-Home Sales Post Surprise Surge in September
New-home sales in the U.S. exceeded expectations in September, rising 12.3% to a seasonally adjusted annual rate of 759,000, according to HousingWire. Despite high mortgage rates, a drop in builder confidence, and declining mortgage applications, new-home sales surged by 33.9% year over year in September.
The National Association of Home Builders attributes this surge to a lack of existing inventory but expects the housing market to slow as affordability challenges persist due to high interest rates. Median new-home prices declined by 3.3% in September, and builders are making adjustments to enhance sales, including offering incentives and constructing smaller, more affordable homes.
According to Alicia Huey, chairman of the National Association of Home Builders (NAHB), the lack of existing inventory is the reason why more homebuyers turn to new construction. However, she expects the housing market to slow in the coming months as affordability headwinds persist.
“Higher interest rates not only raise the cost of housing for buyers, but for builders as well because of increased costs for financing construction loans,” she added.