New home sales in the South surged to a seasonally adjusted annual rate of 477,000 in September, marking a 5.8% increase from August and the highest level since April 2021.
- Compared to the same time last year, new home sales have climbed 14.7%, signaling robust demand even amid economic uncertainties.
Regionally, the results were mixed. The Northeast saw a significant jump in activity, with sales rising 21.7% month-over-month. The West, however, remained flat, while the Midwest experienced a 2.5% decline in new home sales for September.
- Overall, national sales rose 4.1%, more than doubling economists’ expectations of a 1.6% increase.
Inventory: Despite the rise in sales, inventory levels continue to increase. The seasonally-adjusted estimate of new houses for sale reached 470,000 at the end of September, the highest since January 2008.
- This represents a supply of 7.6 months at the current sales pace, a slight improvement from August’s 7.9-month supply. Notably, this is the third time this year that inventory levels have hit this mark.
Bottom Line: As long as homebuilders find it profitable to offer incentives, the limited pool of buyers is likely to favor new homes over existing ones, especially with elevated home prices and mortgage rates.
