Sales of new single-family houses in October 2020 were at a seasonally adjusted annual rate (SAAR) of 999,000 units (1.016 million expected). This is 0.3% (±13.6%)* below the revised September rate of 1,002,000 (originally 0.959 million units), but 41.5% (±22.6%) above the October 2019 SAAR of 706,000 units; the not-seasonally adjusted (NSA) year-over-year comparison (shown in the table above) was +45.5%. For longer-term perspectives, NSA sales were 28.1% below the “housing bubble” peak but 53.0% above the long-term, pre-2000 average.
The
median sales price of new houses sold in October dipped ($1,000 or -0.3% MoM)
to $330,600; meanwhile, the average sales price slumped to $386,200 ($17,700 or
-4.4% MoM). Starter homes (defined here as those priced below $200,000)
comprised 7.5% of the total sold, up from the year-earlier 7.3%; prior to the
Great Recession starter homes represented as much as 61% of total new-home sales.
Homes priced below $150,000 made up 1.3% of those sold in October, down from
1.8% a year earlier.
* 90% confidence interval includes zero. The Census Bureau does not have sufficient statistical evidence to conclude that the actual change is different from zero.
As mentioned in our post about housing permits, starts and completions in October, single-unit completions decreased by 31,000 units (-3.4%). Although completions fell faster than sales (3,000 units; -0.3%), inventory for sale was unchanged in both absolute and months-of-inventory terms.
Existing home sales extended gains in October (280,000 units or +4.3%), to a SAAR of 6.85 million units (6.47 million expected). Inventory of existing homes for sale contracted in both absolute (-40,000 units) and months-of-inventory terms (-0.2 month). Because resales rose while new-home sales fell, the share of total sales comprised of new homes dropped to 12.7%. The median price of previously owned homes sold in October rose to another new record $313,000 ($1,600 or +0.5 MoM).
Housing
affordability improved slightly (+0.7 percentage point) although the median price
of existing homes for sale in September rose by $1,400 (+0.4% MoM; +15.2 YoY), to
a new high of $316,200. Concurrently, Standard
& Poor’s reported that the U.S. National Index in the S&P Case-Shiller
CoreLogic Home Price indices rose at a not-seasonally adjusted monthly change
of +1.2% (+7.0% YoY).
“Housing
prices were notably -- I am tempted to say ‘very’ -- strong in September,” said
Craig
Lazzara, Managing Director and Global Head of Index Investment Strategy at
S&P Dow Jones Indices. “The National Composite Index gained 7.0% relative
to its level a year ago, well ahead of August’s 5.8% increase. The 10- and
20-City Composites (up 6.2% and 6.6%, respectively) also rose at an
accelerating pace in September. The strength of the housing market was
consistent nationally -- all 19 cities for which we have September data rose,
and all 19 gained more in the 12 months ended in September than they had done
in the 12 months ended in August.
“A
trend of accelerating increases in the National Composite Index began in August
2019 but was interrupted in May and June, as COVID-related restrictions
produced modestly-decelerating price gains. Our three monthly readings since
June of this year have all shown accelerating growth in home prices, and
September’s results are quite strong. The last time that the National Composite
matched September’s 7.0% growth rate was more than six years ago, in May 2014.
This month’s increase may reflect a catch-up of COVID-depressed demand from
earlier this year; it might also presage future strength, as COVID encourages
potential buyers to move from urban apartments to suburban homes. The next
several months’ reports should help to shed light on this question.
“Phoenix’s 11.4% increase topped the league table for September; this is the 16th consecutive month in which Phoenix home prices rose more than those of any other city. Seattle (10.1%) and San Diego (9.5%) repeated in second and third place. Even the worst-performing cities, New York (4.3%) and Chicago (4.7%), did better in September than in August. Prices were strongest in the West and Southwest regions, but even the comparatively weak Midwest scored 6.0% gains.”
The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.
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