September 2017 New Home Sales

Sales of new homes surged in September 2017.  According to the Census Bureau, transactions rose to 667,000 on a seasonally adjusted annualized basis.  This is 18.9 percent above August’s upwardly revised tally of 561,000 (originally 560,000).  This jump represents the largest percentage gain in 28 years and puts the indicator at its highest level in the current economic cycle.

Surging sales put pressure on new home inventories, especially relative to monthly transactions.  The actual number of homes on the market was unchanged at 279,000 units.  However, since the volume of signed contracts jumped so much, it trimmed a full month from the relative figure, to wit, at the current sales pace, the nation would be out of new homes in just five months.

A tight inventory allowed builders to remain firm with their offering prices.  The median-priced home rose to $319,700 or jumped 5.2 percent in the period.  Despite the monthly price increase, the year-over-year rate of change for prices is much milder, just 1.6 percent. 

This is a notoriously volatile indicator.  Despite a minor adjustment to the August count, monthly figures are often subject to large revisions, so more time is needed to gauge the veracity of this latest release.  Nonetheless, there could be a budding energy building in the new home sector that is not yet evident in the larger existing homes market.  Atlas remains skeptical and wants to see a few more months of strong growth before believing a renewed acceleration is here to stay.