Looking back over the past three months, we’ve had two outstanding months of new home sales—mostly in September and October. In October, those transactions shot up to an unadjusted yearly pace of 737k. This impressive growth marks a return to vibrancy for the nation’s housing market. That increase is mostly due to a recent boost from lower mortgage rates. Heightened builder incentives have further spurred demand from prospective buyers to jump into the market as well.
It fits because new home sales just skyrocketed in both August and September. This dramatic jump is an indication of healthy rebound following a decade of flatlined growth. That string of expensive strong performances was notable in their robustity. These trends, accompanied by relatively unchanged overall sales figures from September to October, indicate a new trend of market stabilization.
Mortgage Rates and Builder Incentives
As we entered October, mortgage rates fell modestly too. We herald this amendment for bringing reprieve to purchasers who’ve been grappling with skyrocketing expenses and interest rates over the last year. This unprecedented reduction has brought the American dream of homeownership within reach for many more Americans. In turn, local demand for new homes has exploded.
At the same time, builders have reacted to the shifting market landscape by providing greater incentives. These incentives can include reducing the purchase price, offering upgrades, or covering some closing costs, all in an effort to entice a willing buyer. Lower borrowing costs and better availability of options have all contributed to stronger consumer confidence. All this confidence is translating to a new vigor in sales volume.
Monthly Trends in New Home Sales
New home sales continue to climb stoutly since August. Then came September, with a spectacular turnaround in these sales. This overall trend signals positive movement as consumers begin to feel more confident about the state of the housing market. The increase in transactions aligns with broader economic trends that suggest a potential recovery phase for the real estate sector.
With only a 2.4 month supply, the annual pace of sales in October was 737,000. That’s only a slight increase compared to September. The market seems to be stabilizing after some dramatic swings in the first half of the year. Optimists think new home sales are on a sustainable upward trend. So long as mortgage rates remain tolerable and builders keep incentivizing, this will occur.
Looking Ahead
The truth is, analysts—and all of Washington—are watching the housing market like hawks, waiting to pounce on continued signs of strong recovery. These current trends suggest that the industry could be on the cusp of more progress, as buyer confidence increases. Assuming mortgage rates remain favorable, new home sales are poised to continue flourishing. To continue that momentum, builders will have to continue offering strong competitive incentives.