New home sales roar in August

Sales of new single‐family houses saw a big leap in August, according to the latest Monthly New Residential Sales report released this morning by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.

August new single-family home sales soared 28.8% to a seasonally adjusted annual rate of 685,000 compared to the revised July rate of 532,000. 

Compared to the August 2021 rate of 686,000, sales slipped 0.1%.

The median sales price of new homes sold in August was $436,800, falling 6.3% from a median price of $466,300 in July.

The average price in August also fell 6.3% to $521,800 compared to an average price of $556,700 in July. 

Despite the sudden increase in new home sales, the National Association of Home Builders says affordability continues to be an issue. 

“With housing affordability at a more than 10-year low and the Federal Reserve continuing to aggressively raise interest rates to rein in stubbornly high inflation, policymakers must find ways to reduce construction costs that are delaying home projects and putting upward pressure on home prices,” said Jerry Konter, NAHB chairman and a home builder and developer from Savannah, Ga.

The seasonally‐adjusted estimate of new houses for sale at the end of August was 461,000, which is an 8.1-month supply at the current sales pace. Last month, the supply stood at 10.4 months.

“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,” said 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%. The Fed should take careful note of the weakening of the housing market given the policy lag involved with monetary policy. Housing is a leading indicator of economic conditions.”

Here's how August sales break down by region:

• In the Northeast, sales sizzled while jumping ahead 66.7% compared to the prior month. On a year-over-year basis, sales declined 21.9%.
• Sales in the Midwest moved ahead 16.7% and are 5% above the August 2021 rate.
• The South saw sales ascend 29.4% from July and rise 10.4% from the August 2021 rate.
• In the West, new home sales increased 27.5% from the prior month but fell 24% on a year-over-year basis.