New home sales in the U.S. skyrocketed in the month of September, according to a report released by the Commerce Department on Tuesday.
The report said new home sales soared by 14.0 percent to an annual rate of 800,000 in September after falling by 1.4 percent to a downwardly revised rate of 702,000 in August.
Economists had expected new home sales to jump by 2.7 percent to an annual rate of 760,000 from the 740,000 originally reported for the previous month.
Despite the much stronger than expected monthly growth, new home sales in September were still down by 17.6 percent compared to the same month a year ago.
The sharp monthly increase in new home sales came as new home sales in the Northeast spiked by 32.3 percent to a rate of 41,000 and new home sales in the South shot up by 17.5 percent to a rate of 498,000.
New home sales in the West also surged up by 8.2 percent to a rate of 197,000, while new home sales in the Midwest slid by 1.5 percent to a rate of 64,000.
The Commerce Department also said the median sales price of new houses sold in September was $408,800, up 1.8 percent from $401,500 in August and up 18.7 percent from $344,400 in the same month a year ago.
The estimate of new houses for sale at the end of September was 379,000, representing 5.7 months of supply at the current sales rate. The months of supply is down from 6.5 months in August but up from 3.5 months in September of 2020.
“We expect new home sales to move mostly sideways over the rest of 2021 as strong demand and low mortgage rates are tempered by high prices and construction backlogs,” said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.
She added, “The need to work through these backlogs should support new home construction in the months ahead even if the pace of sales moves sideways.”
Last Thursday, the National Association of Realtors released a separate report showing existing home sales rebounded by much more than expected in the month of September.
NAR said existing home sales spiked by 7.0 percent to an annual rate of 6.29 million in September after slumping by 2.0 percent to a rate of 5.88 million in August. Economists had expected existing home sales to jump by 3.6 percent to a rate of 6.09 million.
Existing home sales reached their highest annual rate since January but were still down by 2.3 percent compared to the same month a year ago.