August New Home Sales Pick Up the Pace
New home sales rose in August for the second straight month and at the fastest pace since April, HUD and the Census Bureau reported Friday.
The report said sales of new single‐family houses in August rose to a seasonally adjusted annual rate of 740,000, 1.5 percent higher than the revised July rate of 729,000, but 24.3 lower from a year ago (977,000).
Regionally, sales were mixed, with the largest region, the South, posting a 6 percent gain in August to 445,000 sales, seasonally annually adjusted, from 420,000 units in July; from a year ago, sales fell by 23 percent. In the West, sales rose by 1.4 percent to 378,000 units in August from 366,000 units in July but fell by 16.3 percent from a year ago.
In the Northeast, sales rose by 26.1 percent to 29,000 units, seasonally annually adjusted, from 23,000 units in July but fell by 37 percent from a year ago. In the Midwest, sales fell by 31.1 percent to 51,000 units in August from 74,000 units in July and fell by nearly 47 percent from a year ago.
“The modest pick-up in sales continues to show that underlying demand for homes remains strong,” said Mark Vitner, Senior Economist with Wells Fargo Economics, Charlotte, N.C. “The slight pull-back in sales experienced this spring and early summer likely had more to do with builders struggling to build enough homes to show prospective buyers. It is challenging to sell a home when you are unable to tell a buyer when that home will be completed.”
Vitner noted while lumber prices have come down from levels seen this spring, other key building materials remain in short supply, which is delaying new starts and preventing projects from wrapping up. “Sales would likely be even stronger if builders were able to procure the parts and labor needed to complete single-family projects,” he said.
“Demand for new homes remains strong as household formation continues to grow, and purchasing power is buoyed by historically low mortgage rates,” said Odeta Kushi, Deputy Chief Economist with First American Financial Corp., Santa Ana, Calif. “The lack of existing homes for sale nationwide to meet this demand, provides fertile ground for new construction to accelerate.”
Kushi said the outlook for new home sales is largely dependent on the amount of new homes being built and the demand for new homes. “Demographic demand remains strong, the economy is improving and mortgage rates are low,” she said. “Builders want to build, but face challenges that raise costs and delay construction.”
The report said the median sales price of new houses sold in August was unchanged at $390,900. The average sales price was $443,200, down slightly from July. The seasonally adjusted estimate of new houses for sale at the end of August rose to 378,000, representing a supply of 6.1 months at the current sales rate.
