Sales of new homes rose 3.1 percent in September

Sales of new homes rose 3.1 percent in September

Sales of new homes rose 3.1 percent in September behind a huge jump in building in the Northeast that may help alleviate persistent housing shortages as demand picks up. 

Single-family home sales increased to a seasonally adjusted annual rate of 593,000 units, up from August's 575,000 and 29.8 percent above the September 2015 estimate of 457,000, the Commerce Department reported on Wednesday. 

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There were 235,000 new homes available for sale in September, which is a 4.8-month supply at the current sales pace. The median sales price of new houses sold was $313,500.

"Low mortgage rates, continued job growth and tight inventory levels are all factors that point to increased housing production as we move into 2017," said Robert Dietz, chief economist for the National Association of Home Builders (NAHB).

The NAHB said last week that builder confidence remained on firm ground in October.

Falling inventory has pushed up prices, presenting potential buyers with another hurdle amid jobs growth and historically low mortgage rates. 

"Demand for new homes remains strong in response to employment growth, wage gains, positive demographics and mortgage rates near all-time lows," said David Berson, chief economist at Nationwide.

The S&P CoreLogic Case-Shiller 20-city home price index report on Tuesday showed that home prices rose 5.1 percent in August as fewer homes were available for sale amid growing demand.

Mortgage rates were running about 3.5 percent, according to Freddie Mac's latest figures. 

Ralph McLaughlin, chief economist with Trulia, said that looking past the monthly volatility in new home sales, September was the best month since August 2008.

"By historical standards, however, new home sales per household are still about 36 percent below the long-run average," McLaughlin said. 

Regionally, new home sales increased 33.3 percent in the Northeast, 8.6 percent in the Midwest and 3.4 percent in the South. Sales fell 4.5 percent in the West.