The High Pace Of New Home Sales Is A Good Sign For The Economy
New home sales hit a 10 year high which bodes well for the economy long term. Because of the long time horizon for new construction, particularly long in the case of whole communities, builders have to be sure that the economy will be robust enough to support the sale of their homes by the time that they are built. While no one has a crystal ball, I’ve always believed that builders do the best job of predicting future economic conditions long term.
From the National Association of Home Builders news release:
New Home Sales Pace in September Hits 10-Year High
Sales of newly built, single-family homes in September rose 18.9 percent to a seasonally adjusted annual rate of 667,000 units from an upwardly revised August reading, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. This is the highest sales rate since October 2007. Year-to-date, new home sales are 8.6 percent above their level over the same period last year.
“The September sales numbers show that there is solid, growing demand for new home construction,” said Granger MacDonald, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Kerrville, Texas. “However, builders need to continue to monitor rising construction costs to keep houses affordably priced.”
“New home sales have bounced back from a few soft months and have returned to the strong growth trend we saw earlier this year,” said NAHB Chief Economist Robert Dietz. “As existing home inventory remains tight, we can expect new homes sales to continue to make gains in the months ahead.”
The inventory of new homes for sale was 279,000 in September, which is a 5.0-month supply at the current sales pace.
New home sales increased in all four regions. Sales rose 33.3 percent in the Northeast, 25.8 percent in the South, 10.6 percent in the Midwest and 2.9 percent in the West.