August New Home Sales Up 3.5%

New home sales rose by a modest 3.5 percent in August, tempered by downward revisions from the past three months, HUD and the Census Bureau reported yesterday.

The report said sales of new single-family houses in August came in at a seasonally adjusted annual rate of 629,000, 3.5 percent higher than the revised July rate of 608,000. Sales rose by 12.7 percent from a year ago (558,000). However, HUD/Census revised downward the past three months figures by 40,000.

Regionally, increases in the West, Midwest and Northeast more than offset a decline in the largest region, the South, where sales fell by 1.7 percent, seasonally annually adjusted, to 350,000 units in August from 356,000 units in July. From a year ago, sales improved by 11.5 percent.

In the West, sales rose by 9.1 percent to 168,000 units, seasonally annually adjusted, in August from 154,000 in July and rose by 19.1 percent from a year ago. In the Midwest, sales rose by 2.7 percent to 77,000 units in August from 75,000 units in July and improved by 13.2 percent from a year ago. In the Northeast, sales jumped by 47.5 percent to 34,000 units in August from 23,000 units in July but fell by nearly 3 percent from a year ago.

“While sales are up 6.9% year-to-date, higher mortgage rates have slowed home buying this summer,” said Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C. “Solid job and income growth should keep sales trending higher. Deteriorating affordability and continuing worker and lot shortages make an upside breakout this year unlikely.”

The report said the median sales price of new houses sold in August rose to $320,200; the average sales price rose to $388,400. The seasonally adjusted estimate of new houses for sale at the end of August rose for the fifth consecutive month to 318,000, representing a supply of 6.1 months at the current sales rate.