(CN) — Sales of new homes last month reached their highest level since October 2007, suggesting that buyers, frustrated in their search for an existing home, are buying new ones instead, the Commerce Department said Tuesday.
New home sales jumped 18.9 percent in September to a seasonally adjusted annual rate of 667,000, the most in a decade. Sales, measured by contract signings, rose in all regions, the government said.
They were up 33 percent in the Northeast, 11 percent in the Midwest, and 3 percent in the West. The surprise in the report was the 26 percent rise in sales in the South, which was battered in September by successive hurricanes.
A supply crunch of existing homes has frustrated many would-be buyers and hobbled the housing market this year. September’s figures suggest that Americans are increasingly looking to new homes instead, which could encourage more construction.
But developers have struggled to keep up with demand. Construction of single-family homes slipped nearly 5 percent last month.
Homebuilders are increasingly focused on higher-priced housing, potentially freezing out potential buyers of more modest incomes. The average price of a new home rose to $385,200 in September, the highest on records dating back to 1963.
Last month, 19,000 homes were sold for $500,000 or higher, more than the 13,000 that were sold for $200,000 or less.
The Associated Press contributed to this report.