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September New Home Sales Beat Expectations11-07-16 | News

September New Home Sales Beat Expectations
Jump of Nearly 30 Percent Year-Over-Year

New home sales in September came in much higher than economists had estimated, and the pace for the month is nearly 30 percent higher on a year-over-year basis.

Sales of new single-family homes in September were 3.1 percent higher compared to August, easily beating economists' estimates, and a represent a jump of nearly 30 percent year-over-year.

Census Bureau data shows sales increased to 593,000 units in September, up from the 575,000 units in August, and 29.8 percent above the September 2015 pace of 457,000 units.

Sales rose in every region with the exception of the West, which slumped 4.5 percent during the month. However, sales in the West have climbed 32.4 percent compared to a year ago.

However, new home sales in June, July and August were revised and lowered by a combined 85,000 units, real estate firm Zillow reports. With those changes, August's initially reported 7.6 percent monthly decline in home sales is now a drop of 8.6 percent.

Inventory for new homes remains low, with a 4.8-months' supply of homes available for sale at the current sales pace, the Wells Fargo Economics Group said. During the month, there were only 57,000 new completed homes for sale, and 141,000 are under construction.

Home Purchase Sentiment Drops in September
With four of its six components declining, the Fannie Mae Home Purchase Sentiment Index fell 2.2 points to 82.8 in September.

The net share of consumers who expect mortgage interest rates to go down over the next 12 months fell six percentage points. And the net share of respondents who believe now is a good time to buy a home shed five percentage points. There was also three-percentage-point drop in the net share of consumers who were asked whether they felt they would lose their jobs over the next year. The net share of Americans who say that home prices will go up fell one percentage point.

The only component to rise was household income, which improved by two points. Slightly more consumers reported that their household income is significantly higher than it was 12 months ago. Fannie Mae said the HPSI has dropped for the second straight month, and that a note of caution should to added to its moderately positive housing outlook.

Doug Duncan, senior vice president and chief economist at Fannie Mae, said: "Downside changes came in particular from the HPSI components mortgage rate direction and good time to buy a house. In addition, the starter home tight supply and rising home prices as well as the unsettled political environment are likely giving many consumers a reason to pause or question their home purchase sentiment."

Each HPSI is derived from Fannie Mae's National Housing Survey (NHS), as the index is a reflection of consumers' current views and forward-looking expectations of housing market conditions.

Dodge Momentum Index Tumbles in September
The Dodge Momentum Index, a monthly measure of the first or initial report of nonresidential building projects in planning, fell 4.3 percent in September to 129.0, from its August reading of 134.8.

September's decline was the result of a 5.3 percent drop in institutional planning and a 3.6 percent decrease in commercial planning.

The drop in the DMI follows five consecutive months of gains. Even with the recent volatility on a month-to-month basis, the Momentum Index continues to trend higher, a sign that developers have moved plans forward despite economic and political uncertainty, Dodge Data said.

With the September release, the Momentum Index is 5.1 percent higher than a year ago. The institutional component is 5.4 percent above its September 2015 reading, while the commercial component is up 4.9 percent from a year ago.