New home sales stay strong going into the Fall

The housing market continues to be very strong according to the latest data from the month of October. Historic seasonal trends where the market tends to cool down in the Fall and Winter months are being challenged by the highest number of new home sales reported in half a year.

The breakneck pace of existing home sales has gotten most of the attention in the news, but new home sales have also risen significantly in the last two years to meet rising demand. From September 2021 to October 2021, the sale of new homes increased by 14% to a seasonally adjusted rate of 800,000 homes sold.

Going into October 2021, the gains are certainly less meteoric. Last month, new home sales increased by 0.4% from the previous month. It is also significantly lower than the rate of sales from the same time last year, down 23.1% from October 2020. Despite this slow down, this is still the highest recorded month since April 2021.

That new home sales are continuing to grow well into the Fall season is indicative of the high outstanding demand for housing. With limited supply in the existing home market, builders are quickly working to fill in some of the gap and meet demand.

The supply-demand imbalance can be seen in the increasing price of new homes. According to the U.S. Census Bureau and the Department of Housing and Urban Development, the median sales price in October 2021 was $407,700, significantly higher than median price of $346,990 in October 2020.

With rates still low and inventory of in short supply, the usual seasonal patterns are likely to experience more irregularities in the months to come.

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