Sales of new homes in the U.S. fell in September 2022. According to Reuters, that's because higher mortgage rates are "choking" the U.S. real estate market.
Here are the topline numbers from the report:
New home sales decreased 10.9% to a seasonally adjusted annual rate of 603,000 units last month, the Commerce Department said on Wednesday. August's sales pace was revised down to 677,000 units from the previously reported 685,000 units....
The median new house price in September was $470,600, a 13.9% increase from a year ago.
These figures refer to the raw figures provided in the U.S. Census Bureau's latest monthly report on new residential sales.
Political Calculations pulls other data from the report to estimate the market capitalization for U.S. new homes. Our initial estimate of the seasonally-adjusted trailing twelve month average market cap in September 2022 is $28.29 billion, which represents a decrease of 5.1% from our initial estimate of $29.81 billion for August 2022.
Our revised estimate for August 2022 came in 1.4% lower than the initial estimate at $29.39 billion. The estimate for July 2022's market cap was also revised downward from $31.47 billion to $30.02 billion, as this month's data was significantly revised downward by 4.6%. Even with that downward revision, July 2022 still ranks as the peak month for the market capitalization of the new homes during the Biden administration, which falls below the peak of $30.12 billion recorded a month before the Biden administration began.
The latest update of our chart shows U.S.' new home market cap's time-shifted trailing twelve month average.
The following two charts show the latest changes in the trends for new home sales and prices:
New home sales continued falling:
Upward price trend continues slowing:
We've included the raw monthly data for new home sales and their average monthly sale prices in these latter two charts to illustrate the month-to-month noise in the data. The data for new home sales is typically finalized some three months after it is first reported.
The developing question for U.S. new homebuilders is when might falling sales from an economy fading into recession and falling home prices translate into a collapse of the industry's market capitalization? The new home industry already hasn't registered any sustained growth since December 2020, so it hasn't provided any tailwind to boost the U.S. economy even when its sales were higher and prices were rising more rapidly. The next data release for new home sales will come on 23 November 2022.
Finally, since Reuters identified rising mortgage rates as a main contributor to both falling new home sales and prices, we'll take a closer look at that factor in our next look at how the affordability of new homes is changing. Look for it in the next week.
References
U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 26 October 2022.
U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 26 October 2022.
Labels: market cap, real estate
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