Key Highlights

  • New single-family home sales slipped 0.6% to a 676,000 annualized rate in September, above economists' forecast of 650,000.
  • The 30-year mortgage rate averaged 7.32% last week, up over 130 basis points since the late February Iran attack.
  • The median new house price fell 3.9% to USD 400,400 from a year earlier, with supply at 8.4 months.
  • The Case-Shiller 20-City index rose 2.7% year over year in August, its strongest annual gain since May 2025.

Sales Slip After August Jump

Sales of new US single-family homes fell in September, partially reversing the prior month's jump, as higher mortgage rates tied to the Middle East conflict weighed on demand. The Census Bureau said on Tuesday that sales slipped 0.6% to a seasonally adjusted annualized rate of 676,000 units. That was above the 650,000 rate economists polled had forecast. Sales were 5.3% lower than a year earlier.

August was revised lower, to a rate of 680,000 units from 684,000 reported previously.

Sales dropped in the Midwest and South but soared in the Northeast and West. New home sales are counted at the closing of a contract, which makes them the most timely read on housing demand, though they account for a small share of total US home sales.

Mortgage Rates and Affordability

The average rate on a 30-year fixed mortgage has surged by more than 130 basis points since the US and Israel attacked Iran at the end of February. Freddie Mac data show it averaged 7.32% last week.

Higher rates have fanned what economists describe as an affordability crisis, a theme that has dominated campaign messaging ahead of the November 3 midterm elections. A National Association of Home Builders survey last week showed builders' expectations of home sales over the next six months at their lowest since April 2012, excluding the plunge early in the COVID-19 pandemic.

Prices and Supply

The median new house price fell 3.9% from a year earlier to USD 400,400, still a high level. Most homes sold in September were priced below USD 499,999.

Supply on the market fell to 476,000 units from 481,000 in August. At September's sales pace, it takes 8.4 months to clear inventory, down from 8.5 months in August.

Builders Hold Back

Elevated inventory also discourages builders from breaking new ground on single-family projects. The government reported last week a sharp drop in single-family housing starts in September, and permits for future construction slumped to a 3.5-year low.

Broader Price Gauges Still Rising

The S&P Cotality Case-Shiller 20-City Home Price Index rose 2.7% year over year in August, its strongest annual increase since May 2025 and above the 2.5% market forecast. Chicago led all metropolitan areas for a sixth consecutive month with a 6.7% gain, followed by New York at 6.2% and Cleveland at 4.3%.

Seattle recorded the steepest annual decline for a third straight month at 2.0%, followed by Las Vegas at 1.3% and Denver at 0.8%. On a monthly basis, prices fell 0.4% in August after holding unchanged in July, while inflation-adjusted prices rose 0.3%.

A separate Federal Housing Finance Agency gauge for homes backed by Fannie Mae and Freddie Mac rose 0.3% in August from July, above the 0.2% forecast. The July reading was revised down to 0.2% from 0.3%. Year over year, prices rose 2.4%, easing from 2.5% a month earlier.

Monthly changes ranged from a 0.8% decline in New England to a 2.1% gain in the East South Central division. Twelve-month changes ranged from 0.5% in the Mountain division to 4.4% in the East North Central division.

Markers to Follow

Weekly mortgage rate readings, builder sentiment, housing starts and permits, and new home inventory frame the next data points.