Sales of new homes ticked down 3.5% in September from August, the Census Bureau reported Monday, but sales are still much higher than they were a year ago, spurred in part by the pandemic.
Despite the dip in sales last month, new home sales were over 32% above the number sold in September of 2019: 726,000 versus 959,000.
Lawrence Yun, chief economist at the National Association of Realtors, considered last month’s total to be “very strong.” He attributed the drop in new home sales in September to a lack of inventory and not less demand. “It’s just a very tight market,” Yun told the Washington Examiner.
There was a 3.6 month supply of new homes in September, the Census Bureau reported. That number is normally 6 to 7 months, according to Yun.
Other aspects of the housing market appear to be hot. Existing home sales soared 9.4% in September, up nearly 21% from one year ago, the NAR reported last week.
One issue driving all home sales from a year ago is the coronavirus. The pandemic has prompted Americans to opt for detached homes over living in crowded urban areas.
Glenn Kelman, Redfin’s CEO, recently said that homebuying has shifted to rural areas and away from densely populated urban areas. “Rural demand is much stronger right now than urban demand, and that’s a flip from where it’s been for the longest time, where everybody wanted to live in the city,” he told CNBC.
Chip Murphy, regional vice president of New York-based Hunt Real Estate, said buyers are looking for yards to provide space for a host of activities since backyards are the safest place to be outside. “Buyers are looking for activities to keep them busy at home, which has resulted in the popularity of outdoor at-home hobbies like gardening and landscaping, bird-watching, and outdoor home improvements,” he said.
Joseph Zoppi, managing partner of Templar Real Estate in Princeton, New Jersey, said that people migrating to rural areas is happening nationwide. “That’s a big, big trend. Super big. It’s big in a number of states right now,” he said.
Another factor driving home sales is low interest rates. Rates on a 30-year, conventional, fixed-rate mortgage decreased to 2.89% in September, down from 2.94% in August, according to Freddie Mac.
