New home sales climb in August

New home sales climbed again in August, fueled by low mortgage rates and an urban exit from metro regions.

Sales of new single-family homes rose 4.8% to a seasonally adjusted annual rate of 1.011 million from the revised July rate of 965,000, the Department of Commerce reported.

The latest figures are also 43.2% above the pace of 706,000 from August 2019.

“Surging sales are consistent with record builder confidence levels stemming from higher buyer traffic, historically low interest rates and a shift in demand for lower density markets,” said NAHB Chairman Chuck Fowke. “However, higher lumber costs and limited building material availability in some markets signify we could see higher prices down the road.”

The median sales price of new houses sold in August was $312,800, falling about 4.6% from a median price of $227,800 in July. The average sales price was $369,000, slipping from an average price of $371,000 in the previous month.

Here is how new single-family home sales for August break down by region:

By region:

• New home sales rose 5% in the Northeast in August and are up 27.3% compared to the pace from August 2019.
• In the Midwest, new home sales fell 21.4% in August but are up 54.7% year over year.
• Sales in the South increased by 13.4% and jumped 50% on a year over year basis.
• Sales in the West slipped 1.7% in August but have soared 26.5% on a year over year basis.

The seasonally adjusted rate of new homes for sale is at 282,000, representing just a 3.3 month supply, which is a 40% drop from a year ago.

“New home sales are now 15 percent higher on a year-to-date basis, with gains in all regions,” said NAHB Chief Economist Robert Dietz. “But with inventory at just a 3.3 months’ supply, more construction is needed. The challenge will be whether materials and labor are available.”

Earlier this week, National Association of Realtors Chief Economist Lawrence Yun also warned that housing inventory is becoming problematic while reporting that existing-home sales increased in August to their highest level since December 2006.

The full Monthly New Residential Sales report for August 2020 is available here.