NAHB credits a short-term decline in mortgage rates (to 5.3%) as a reason for the uptick, as new-home inventory remains at an elevated 8.1-months’ supply.
WASHINGTON – Sales of newly built, single-family homes in August increased 28.8% to a 685,000 seasonally adjusted annual rate from an upwardly revised reading in July, according to new data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
Despite the August increase, however, new home sales are down 14% on a year-to-date basis.
“The sales gain in August reflects that there is clearly sidelined demand for housing, but it is being constrained by rising interest rates that are pricing many potential consumers out of the market, particularly entry-level buyers,” says National Association of Home Builders (NAHB) Chief Economist Robert Dietz. “After a brief lull when mortgage rates fell below 5.3% for much of August, they have since jumped much higher in September and are now approaching 7%.”
A new home sale occurs when a sales contract is signed or a deposit accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the August reading of 685,000 units is the number of homes that would sell if this pace continued for the next 12 months.
New single-family home inventory remained elevated at an 8.1-months’ supply. The count of homes available for sale, 461,000, is up 24.6% over last year – only 49,000 of that number is completed and ready to occupy. The remaining have not started construction or are currently under construction.
The median new home price in August was $436,800, up 8.2% from a year ago, in part due to increased construction costs. NAHB says it’s a diminished growth rate as a growing number of builders cut prices due to slackening demand.
Regionally, on a year-to-date basis, new home sales fell in all four regions, down 15.6% in the Northeast, 24.5% in the Midwest, 10.8% in the South and 16.7% in the West.
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