Sales of new single-family homes are up 12.3 percent in September to a 759,000 unit seasonally adjusted annual rate after a negligible revision to 676,000 units in August. The sales pace is up 33.9 percent compared to September 2022. The September pace is above the consensus of 685,000 units in the Econoday survey of forecasters. Despite the increase in mortgage rates in September, homebuyers who are ready to purchase are facing limited supplies of existing homes and turning to new construction. The Freddie Mac average rate for a 30-year fixed rate mortgage is up to 7.20 percent in September after 7.07 in August, and over a full point higher than the 6.11 percent in September 2022.

The months' supply of new homes available for sale dips to 6.9 in September from 7.7 months in August, and is well below the 9.7 months in September 2022. The supply is the leanest since 6.0 in February 2022. The median price of a new single-family home is down 3.3 percent in September to $418,800 after $433,100 in August, and down 12.3 percent compared to a year ago. In part, homebuilders are offering discounts to help close the deal with homebuyers. However, builders have also seen sales declines in the higher price ranges.

The rush to secure a new single-family home purchase during the summer before interest rates rose further has eased. Sales of homes not yet started account for 15 percent of the total in September after 18 percent in August. Homes under construction account for 46 percent of sales in September, up slightly from 44 percent in August. Sales of completed homes are little changed at 39 percent in September from 38 percent in August.

New home sales fell sharply from 739,000 in July to a 675,000 annual rate in August with forecasters for September calling for a slight rebound to 685,000 despite the steep surge in interest rates.

New home sales measure the number of newly constructed homes with a committed sale during the month. The level of new home sales indicates housing market trends and, in turn, economic momentum and consumer purchases of furniture and appliances.

This provides a gauge of not only the demand for housing, but the economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as new home sales, investors can gain specific investment ideas as well as broad guidance for managing a portfolio. Each time the construction of a new home begins, it translates to more construction jobs, and income which will be pumped back into the economy. Once the home is sold, it generates revenues for the home builder and the realtor. It brings a myriad of consumption opportunities for the buyer. Refrigerators, washers, dryers and furniture are just a few items new home buyers might purchase. The economic"ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month. Since the economic backdrop is the most pervasive influence on financial markets, new home sales have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the new home sales data carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings companies.