New-Home Sales Surge Despite Rising Prices

Agent shaking hands with clients outside home

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Home buyers are rushing to purchase new homes. Sales of newly built, single-family homes jumped 14% in September compared to August, reaching a six-month high, the U.S. Department of Housing and Urban Development and U.S. Census Bureau reported Wednesday.

Home buyers appear to be shrugging off price increases, too. The median new-home sales price continued to increase to $408,800 in September, up 18.7% over a year ago.

“Solid demand and ongoing building material supply bottlenecks continue to put upward pressure on new-home prices,” says Jing Fu, senior economist at the National Association of Home Builders.

Only 21% of current sales are below $300,000, compared to 35% a year ago, Fu adds.

Regionally, new-home sales rose the most on a year-to-date basis in September in the Midwest—up 3.4%, followed by a 1.9% increase in the Northeast and a 1.6% uptick in the South. The West is the only major region of the U.S. to report a drop in new home sales on a year-to-date basis, down by 8.8%.

Overall, housing demand remains high, builders report. “Limited existing inventory and low interest rates are keeping demand strong, and more potential buyers may be coming off the fence as they expect interest rates to rise in the future,” says Chuck Fowke, chairman of the National Association of Home Builders. Mortgage rates have been steadily rising over recent weeks off from their sub-3% lows. Read more: Rising Rates Won’t Deflate Buyer Demand