New Home Sales decreased to 959,000 Annual Rate in September

The Census Bureau reports New Home Sales in September were at a seasonally adjusted annual rate (SAAR) of 959 thousand.

The previous three months were revised down, combined.

Sales of new single-family houses in September 2020 were at a seasonally adjusted annual rate of 959,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 3.5 percent below the revised August rate of 994,000, but is 32.1 percent above the September 2019 estimate of 726,000.
emphasis added

New Home SalesClick on graph for larger image.

The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

This is the second highest sales rate since 2006 (just below last month).

The second graph shows New Home Months of Supply.

New Home Sales, Months of SupplyThe months of supply increased in September to 3.6 months from 3.4 months in August.

The all time record high was 12.1 months of supply in January 2009. The all time record low was 3.4 months in August 2020.

This is below the normal range (about 4 to 6 months supply is normal).

“The seasonally-adjusted estimate of new houses for sale at the end of September was 284,000. This represents a supply of 3.6 months at the current sales rate.”

New Home Sales, InventoryOn inventory, according to the Census Bureau:

“A house is considered for sale when a permit to build has been issued in permit-issuing places or work has begun on the footings or foundation in nonpermit areas and a sales contract has not been signed nor a deposit accepted.”

Starting in 1973 the Census Bureau broke this down into three categories: Not Started, Under Construction, and Completed.

The third graph shows the three categories of inventory starting in 1973.

The inventory of completed homes for sale is low, and the combined total of completed and under construction is lower than normal.

New Home Sales, NSAThe last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).

In September 2020 (red column), 75 thousand new homes were sold (NSA). Last year, 56 thousand homes were sold in September.

The all time high for September was 99 thousand in 2005, and the all time low for September was 24 thousand in 2011.

This was below expectations of 1,025 thousand sales SAAR, and sales in the three previous months were revised down, combined. I’ll have more later today.

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