New Home Sales Post Solid August Gains

New single-family home sales rose by a better-than-expected 5.7 percent in August, HUD and the Census Bureau reported yesterday.  

The report said sales reached a seasonally adjusted annual rate of 552,000, 5.7 percent above the revised July rate of 522,000 and 21.6 percent (±18.7%) above the August higher than a year ago (454,000).   

Regionally, sales improved everywhere except the Midwest, which saw a 9.1 percent decline in August to 60,000 units, seasonally adjusted, from July’s 60,000. However, sales improved by 15.4 percent from a year ago.  

In the South, sales rose by 7.4 percent to 319,000 units from July’s 297,000 and improved by 27.6 percent from a year ago. In the West, sales rose by 5.4 percent to 137,000 units from July’s 130,000. In the Northeast, sales rose by 24.1 percent to 36,000 units from July’s 29,000 and improved by 24.1 percent from a year ago.  

The median sales price of new houses sold in August rose slightly to $292,700; the average sales price improved to $353,400. The seasonally adjusted estimate of new houses for sale at the end of August was 216,000, representing a supply of 4.7 months at the current sales rate.  

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said new home sales have risen in four of the past five months and are up more than 5 percent since the start of the year.  

“The increase in sales is consistent with the rise in the National Association of Home Builders/Wells Fargo Homebuilders’ Index, which rose to a 10-year high in September, suggesting sales should strengthen further this fall,” Vitner said.  

Vitner also noted inventories of new homes remains “exceptionally tight,” rising to just 216,000 homes. “All of the increase took place among homes not yet started,” he said. “Low new home inventories are helping drive home prices higher.”