According to a new report from the National Association of Home Builders (NAHB), Washington, D.C., sales of newly-built single-family homes fell 3.5% in September to 959,000, based on data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

Despite the monthly decline, the report noted that the September rate is 32.1% higher than the September 2019 pace, and, on a year-to-date-basis, new home sales are up 16.9% in 2020.

According to the NAHB, a new home sale occurs when a sales contract is signed and a deposit is accepted. The home can be in any stage of construction when the sale occurs: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the September number of 959,000 units is the number of homes that would sell if this pace continued for the next 12 months.

“With sales up 32% from a year ago, the demand for new single-family homes remains strong as interest rates are at historic lows,” said Chuck Fowke, chairman of the NAHB and a founder and president of Homes by John C. Fowke Inc., a custom home building firm in Tampa, Fla. “However, the recent run-up in lumber and other material costs is leading to an increase in pricing.”

“The pace of new home sales growth over the summer was going to slow, given that the gap in sales and single-family construction reached an all-time high in August,” said Robert Dietz, chief economist and senior vice president for economics and housing policy for the NAHB. “Indeed, September sales of new homes that had not started construction were up 47% compared to a year ago.”

The report added that inventory inched up to a 3.6 months’ supply, with 284,000 new single-family homes for sale, 32.1% lower than August 2019.

“This is the third consecutive month with inventory running under four months’ supply,” the report mentioned.

Of the total inventory, just 48,000 are completed and ready to occupy. These inventory numbers point to additional construction gains ahead, said the NAHB, as indicated by record levels of the NAHB/Wells Fargo Housing Market Index.

On a regional basis, new home sales on a year-to-date basis were up in all four regions: Midwest (up 25.9%), Northeast (up 22.5%), West (up 18%) and South (up 14.4%).