Housing affordability issues south of the border have driven down sales of newly built homes across the US.
Figures released Wednesday by the HUD and US Census Bureau shows a 5.5% decline in new home sales in September compared to August (which was revised downwards) – a seasonally adjusted annual rate of 553,000 units.
Only the Midwest posted gains month-over-month (6.9%) while the South declined 1.5%, the West declined 12%, and the Northeast saw a 40.6% drop.
Year-over-year though, sales were up 3.5% with all regions posting gains except the Northeast which saw a 16.5% decrease.
“Home price gains and rising interest rates are slowing down the housing market, particularly in high-cost areas and among entry-level buyers who are sensitive to price increases,” said NAHB Chief Economist Robert Dietz. “Builders need to provide homes at different price points to address these affordability concerns. Meanwhile, overall job and economic growth should help support the housing market in the months ahead as it adjusts to higher mortgage interest rates.”
Market shifts to lower priced homes
The median sales price of new homes has declined year-over-year as the market has shifted to lower priced homes. The median in September 2018 was $320,000 compared to $331,500 a year earlier.
Inventory of new homes for sale was 327,000 in September.
“New home sales activity has slowed this summer as housing affordability remains a serious issue,” said Randy Noel, chairman of the National Association of Home Builders (NAHB) and a custom home builder from LaPlace, La. “However, sales are up from this time last year and builders continue to report consumer interest in housing.”