At 10:00 A.M. (EDT), we received the latest report on the recovering housing market when the U.S. Department of Commerce issued new residential data for the month of September. The report showed progress is being made in this critical area of the economy.
Specifically, sales of new single-family houses in September came in at a seasonally-adjusted annual rate of 389,000. That represents a 5.7% increase from the revised August figure, and a 27.1% gain over the year ago number. The consensus expectation called for sales of roughly 385,000 new units in September.
A geographic breakdown of the new home sales data was also encouraging. New home sales were up on a year to year basis, 75.0% in the Northeast, 24.3% in South, and 62.1% in the West, while the environment remains challenging in the Midwest. It should be noted that these eye-catching gains should be seen in perspective, as they are coming off a very low base.
Of further importance, the median price of a new home sold stood at $242,000, with the average at $294,000. Also, the supply of homes for sale slipped to 4.5 months, which also is encouraging. The supply level seems to be tightening, which could lead to some improvement in prices, as well as an eventual uptick in construction levels.
Notably, many of the home building stocks, and related issues, have strengthened in price over the past several months, and this too is encouraging.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.