September 2024's new home sales were remarkably strong when compared to the muted numbers reported a month earlier.

The U.S. Census Bureau's initial estimate of the annualized number of sales in September 2024 was 738,000. If that number holds, that would be the second highest figure reported since February 2022's finalized estimate of 773,000 new homes sold. The next month, new home sales plunged as the Federal Reserve began a series of rate hikes, which forced mortgage rates to rise.

In reporting September 2024's numbers, Reuters attributed the increase in sales to a decline in mortgage rates down to the 6% level during the month as the Federal Reserve acted to cut interest rates for the first time since 2020.

The three following charts track the trends for the U.S. new home market capitalization, the number of new home sales, and their sale prices as measured by their time-shifted, trailing twelve month averages from January 1976 through September 2024.

New home sales trending up:

Prices on slow downtrend, but elevated:

September 2024's initial estimate of the market cap for the U.S. new home market is $30.59 billion, which is less than the initial estimate of $31.06 billion for August. However, both August 2024's number of estimated sales and the average sale price of new homes sold was revised lower, pushing that month's estimated market capitalization for the U.S. new home market down to $30.46 billion.

We suspect October 2024's numbers are going to look quite different. That's because mortgage rates have rebounded during the last several weeks, erasing a large portion of the reduction in interest rates that boosted sales in September.

That may be quite a headwind for the U.S. new home market. We'll find out more in a month.

References

U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 24 October 2024. 

U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 24 October 2024. 

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