Sales of new homes jumped in September, even as mortgage rates climbed toward 8%. It’s a sign that buyers remain eager to buy new homes in a market with few previously owned options—and builder incentives probably don’t hurt.
New home sales, a measure of contract signings for newly constructed homes, rose 12.3% to a seasonally-adjusted annual rate of 759,000 from August’s upwardly-revised rate of 676,000, government data released Wednesday show. Economists had expected a 0.7% gain from August’s preliminary level, according to FactSet. September’s rate was about 34% higher than one year ago, and the highest since February 2022.
The gain shows that prospective buyers have remained in the market despite quickly-rising mortgage rates. The data captures a period when mortgage rates climbed to their highest levels in two decades. Since the end of September, mortgage rates have continued to gain, with the average 30-year fixed mortgage rate rising last week to 7.63%, its highest level since late 2000.
With few previously owned homes available for sale, the data suggests buyers have continued to seek out more options—not to mention price cuts or buyer incentives—from builders. About three in 10 builders surveyed by the National Association of Home Builders in October said they reduced home prices, while 62% said they offered sales incentives more broadly.
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