Volatility tied to low sample sizes is what the new home sales report is known for, proving its reputation again as September surged 18.9 percent to a 667,000 annualized rate. This is the largest percentage gain in nearly 28 years and is the highest level of the economic cycle, since October 2007. The revision to August is surprisingly slight, now at 561,000 vs an initial 560,000.
If hurricanes affected the South in September, then they apparently lifted sales which rose 26 percent in the month to a 405,000 rate. Sales in the three other regions also rose, led by a 33 percent gain in the Northeast to a 48,000 rate and an 11 percent increase in the Midwest to 73,000. Sales in the West rose 2.9 percent to 141,000.
The surge in sales makes inventories look even more tight. The number of new homes on the market did hold unchanged in the month at 279,000 yet, relative to sales, supply fell 1 full month to 5.0 months.
Underscoring the strength of the data is strength in prices as sellers were not giving discounts. The median rose a very steep 5.2 percent in the month to $319,700. And prices may have further to run as the year-on-year gain, at only 1.6 percent, is far below the yearly sales rate of 17.0 percent.
The volatility that this report is subject to makes today's results feel uneasy. The 3-month average tells a less dramatic story, at 603,000 which is roughly where the trend line has been much of the year. But September's surge is still something to take notice of, and unless it's revised away or simply proves a one-month wonder, the new home market may be accelerating sharply into year end.
New home sales have been the leading strength of the nation's housing sector despite slowing steadily through the year. Hurricane effects were evident in the South during August though other regions also declined. A positive in the data was a rise in supply which has been low and limiting buyer choices and sales along with it. Completions of single-family homes were up in September which will be a plus for this report. The consensus for September new home sales is for a 555,000 annualized rate vs 560,000 in August.