New home sales rose 17 percent in September compared to the same month last year. Census estimated new home sales for September at a seasonally adjusted annual rate (SAAR) of 667,000 in September. The median price of a new home contracted in September was $319,700 while the average price of a new home contracted in September stood at $385,200. Both figures represent increases from last year’s prices. The supply of new homes decreased to 5 months in September, a slight decrease from the 5.1 month supply level at this time last year.

The rise in September new home sales likely came at the expense of existing home sales, as evidenced by the September report from NAR. It is important to remember that the Census counts a new home “sale” at the time of contract signing where NAR’s existing sales report is a reflection of actual closings. While encouraging, the latest surge in Census new home sales looks to be another outlier which will later be revised downward. The Census new home sales reports are notorious for volatility due to relatively small sample sizes. Those “seasonally adjusted” annual rates are subject to constant revision, so trends are more important observations.

It would appear that both new home sales and new automobile sales received a significant boost from hurricanes Harvey and Irma. What remains to be seen is how many of these Census contracts to build new homes lead to actual closings. For now the trend is still your friend if you are a new home builder, but the situation becomes more complicated with each move higher in prices. With home prices at elevated levels, new home buyers will continue to weigh their options. Those with the means to do so are continuing to jump into the new home market. Others are finding that the numbers may not add up and may choose to rent instead.

Average new home prices in the DFW metro area are running just below the prices reported by Census. After reaching an average high near $400,000 this summer, average prices for new homes purchased in the DFW area cooled to $371,467 in September.