Ahead of the Bell: US new-home sales

October 26, 2015 GMT

WASHINGTON (AP) — The Commerce Department reports on sales of new homes in September at 10 a.m. Eastern on Monday.

SLIGHT DECREASE LIKELY: Economists forecast that new-home sales dipped 0.4 percent last month to a seasonally adjusted annual rate of 550,000, according to a survey by data firm FactSet.

In August, sales of new homes surged 5.7 percent to 552,000. This followed a strong 12 percent gain in July, so some pullback is expected as the summer buying season has officially come to a close.

STEADY DEMAND: Americans’ zeal for newly built homes took off this year. Solid hiring over the past three years has improved many family balance sheets, while rising home prices has returned equity to current homeowners now seeking to upgrade to new residential developments. Sales of new homes have soared 21.1 percent during the first eight months of 2015.

Still, the housing market has yet to fully recover from the bursting of the housing bubble and the 2008 financial crisis. Sales of new homes remain below the 52-year historic average of 655,200. Builders have focused on more expensive properties with higher profit margins and sales prices averaging $353,400.


The focus on higher-end buyers has left a shortage of properties on the market. A mere 4.7 months months’ supply of new homes exist, much lower than the six months associated with a healthy market.

Similar trends dominate sales of existing homes. The National Association of Realtors said last week that existing homes sold at a seasonally adjusted annual pace of 5.55 million, advancing 8.8 percent from a year ago. But the number of listings on the market has dropped 3.1 percent during that time.

Relatively low mortgage rates have helped to fuel the demand. The rate for a 30-year fixed mortgage averaged just 3.79 percent nationwide last week, according to mortgage buyer Freddie Mac, far below historical norms.