New home sales climb as prices fall
The median sale price for new homes dropped more than 12% in the last year, while sales shot up, outpacing inventory.
Key points:
- The national median sale price for new homes in September was $418,800, down 12.3% from a year ago.
- Sales rose to a 19-month high, however, as buyers found few existing homes to choose from.
- Inventory of new homes has fallen, but with 6.9 months worth of supply in September, the market is still relatively balanced.
After dipping in the spring, new home prices gained momentum during the summer months — only to come tumbling back down in September. At the same time, sales increased as buyers found few options in the resale market.
The national median sale price for new homes sold in September was $418,800, according to the latest Census data. That's down from $433,100 the month before, and off by 12.3% from last September, when median new home prices reached $477,700.
The all-time high came just a month later, with new home prices topping out at $496,800 in October 2022, even as mortgage interest rates surpassed 7%.
There are a couple of reasons why the price of new homes has dropped over the last year, National Association of Home Builders analyst Danushka Nanayakkara-Skillington wrote in response to September's stats.
"Decline in home size and stability in building material costs, especially lumber prices, have contributed to a fall in home prices," she said. "The majority of homes (46%) were priced between $300,000-$500,000."
Sales reach highest level in 19 months
With prices down, and a limited supply of existing homes, buyers appear to have turned to the new home market. The seasonally adjusted annual rate for new single-family homes sold in September was 759,000, up from 676,000 the previous month, and the highest annualized rate since February 2022.
When compared to the pandemic-era low of 543,000 in July 2022 and the high point of 1.03 million in August 2020, the current annual rate of sales appears to be squarely in the middle.
In contrast to the resale market, the inventory of new homes is still healthy, with 6.9 months of supply in September. Nanayakkara-Skillington noted that a six-month supply reflects a balanced market.
But building has not kept pace with demand, and inventory of new homes has been declining for much of the past year. Inventory was down from 7.7 months of supply in August, and a year ago, there were 9.7 months worth of new homes on the market.