New Home Sales Surge to 7-Year High, but Context Remains Important

Sales of newly constructed single-family houses, unlike their existing home counterparts, continued to rise in August.  While existing home sales overall fell by 4.8 percent in August and single family sales by 5.3 percent, new homes sold at a seasonally adjusted annual rate of 552,000 units, an increase of 5.7 percent from July's sales and 21.6 percent higher than sales in August 2014 of 454,000.  The August sales rate was the highest in more than 7 years and was far above analysts' expectations of 515,000.  Context is important though...



The New Residential Sales report, jointly produced by the U.S. Census Bureau and the Department of Housing and Urban Development also contained revised July sales numbers.  These were raised to 522,000 from the 507,000 estimate originally provided.  The revision put July in third place for sales over the last 12 months, exceeded only by August and by February 2015's rate of 545,000 units.  

On a non-seasonally adjusted basis the report estimates there were 45,000 newly constructed homes sold in August compared to 44,000 in July and 36,000 a year earlier.

The median price of a new home sold in August was $292,700 and the average price was $353,400.  A year earlier the median and mean prices were $291,700 and $356,200 respectively.

At the end of August there were approximately 216,000 new homes available for sale, an estimated 4.7 month supply at the current rate of sales.  Homes that sold during the month were on the market a median of 3.7 months.  Two-thirds of the homes sold during August were either under construction or not yet started.

Sales in the Northeast were 24.1 percent higher than in July as well as in August 2014.  The Midwest was the only region where sales declined for the month, down 9.1 percent, however they remained 15.4 percent higher than the previous August.  Sales rose 7.4 percent month-over-month in the South and 27.6 percent year-over-year and in the West they were up 5.4 percent and 11.4 percent for the two periods.