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The sale of new homes increased to the fastest pace in 10 years, according to the U.S. Census Bureau and Department of Housing and Urban Development (HUD). New single-family home sales rose in September 2017 to a seasonally adjusted annual rate of 667,000 sales, marking an 18.9 percent increase from the 561,000 new homes sales in August and a 17 percent spike from the 570,000 new homes sold in September 2016.
These figures puzzled economists, who had forecasted a drop in new home sales for September. This sales activity is an encouraging development for a housing market that experienced a mild summer which was exacerbated by hurricanes.
The role of the hurricanes is a matter touched on by Aaron Terrazas, Senior Economist at Zillow, “The recovery from Hurricanes Harvey and Irma, which hit Texas and Florida in late August and early September, was very clearly the driving force behind the rebound. Sales in the South increased by 25.8 percent from August to September, compared to a 10.6 percent increase in the Midwest and a 2.9 percent increase in the West.”
Trulia Chief Economist Ralph McLaughlin identified a slow summer as the catalyst behind the increase, “September’s new home sales jumped strongly, stemming what could have been a three-month skid. What’s also promising is that sales are up strongly in the South, suggesting the streak of hurricanes that hit there have had little impact on demand for new homes.”
The rise in new home sales was not hindered by an increase in median new home sale prices, which reached $319,700 in September from $300,300 in August. With this vibrant buying activity, housing inventory dropped to 279,000 new homes for sale from 284,000 one month prior.