August Home Sales Beat Expectations

New home sales beat expectations in August, increasing by 7.1 percent from July and 18 percent from a year ago, 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 713,000, up by 7.1 percent from the revised July rate of 666,000 and is 18.0 percent higher than a year ago (604,000).

Regionally, sales increases in the South and West more than offset declines elsewhere. In the South, sales rose by 6 percent in August to 426,000 units, seasonally annually adjusted, from 402,000 units in July and improved by nearly 25 percent from a year ago. In the West, sales jumped by 16.5 percent to 191,000 units in August from 164,000 units in July and improved by nearly 18 percent from a year ago.

In the Midwest, sales fell by 3 percent in August to 64,000 units, seasonally annually adjusted, from 64,000 units in July and fell by 7.2 percent from a year ago. In the Northeast, sales fell by nearly 6 percent to 32,000 units in August from 34,000 units in July and were unchanged from a year ago.

The report said the median sales price of new houses sold in August rose to $328,400. The average sales price rose to $404,200. The seasonally adjusted estimate of new houses for sale at the end of August fell by 2.1 percent to 326,000, representing a supply of 5.5 months at the current sales rate.

“Housing is set to contribute to third quarter GDP growth, the first time in more than a year,” said Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C. “Lower mortgage rates have finally given home buying a boost.”

Vitner noted the improving pace is helping to clear inventories. “Residential investment has dragged on overall GDP growth for six consecutive quarters, but the stronger pace of sales points to a positive contribution in Q3,” he said. “It should also feed through to stronger construction in coming months.”