The numbers: Sales of new homes in the U.S. rose in August, as the market for newly-constructed buildings continues to show signs of stabilization after months of declines.
U.S. new-home sales increased 1.5% to an annual rate of 740,000, the government said Friday. The figure equates to how many homes would be sold over a yearlong period of time if the same number were bought in each month based on the rate of sales in July. Compared to a year ago, sales were down 24%.
The median forecast of economists polled by MarketWatch was that new home sales would come in at an annual rate of 720,000 for August.
Unlike the existing-home sales report from the National Association of Realtors, the new-home sales report from the U.S. Census Bureau captures sales when the contract is signed rather than when the sale is closed.
The report’s small sample size also means that it is quite volatile and prone to significant revisions. Indeed, the sales figure for July was upwardly-revised to 729,000 from the originally reported number of 708,000.
What happened: The median sales price of new houses sold in August was $390,900, matching July’s figure, which was a record high. The supply of new homes for sale increased between July and August, equating to a 6.1-month supply of homes.
Regionally, the Northeast notched the largest gain in new-home sales, while the Midwest was the only part of the country to record a decrease.
The big picture: Whether new home sales can keep this steady pace will depend upon how willing buyers are to stomach rising prices — especially given expectations that mortgage rates are set to increase given the Federal Reserve’s shifting policies.
“Buyers show signs of having moved past a ‘land-a-home-at-all-costs’ mentality as rising home prices mean purchasing a home – whether new or existing – requires a larger share of the typical American’s paycheck,” said Danielle Hale, chief economist at Realtor.com. “Consumers were recalibrating priorities this summer, balancing the resumption of travel, vacations and dining out with big ticket budget items like home-buying or renting – and doing so in the face of rising costs on just about everything.”
What they’re saying: “New home sales have fallen sharply this year, but they have not dropped as far as the mortgage applications data suggest. That’s probably because the proportion of cash buyers, who don’t appear in the mortgage data, has risen, as it clearly has in the existing homes market,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a research note.