In a joint release the Census Bureau and Department of Housing and Urban Development reported Wednesday that newly constructed single family homes sold at a seasonally adjusted annual pace of 504 thousand in August, up 18 per cent from July and 33 per cent from August 2013. The supply of new homes available for sale inched up to 203 thousand from 201 thousand in July.
That month’s advance is a positive single for the ongoing housing market recovery. After a disappointing pause in the first half of the year the gain in sales represents a resumption of the momentum that built steadily through 2012 and 2013. The increase in inventory reflects builders’ growing confidence in the recovery but also caution not to get too far ahead of demand.
US New Home Sales
Broader trends suggest new-home purchases have picked up but are still running below historical averages. August’s new-home sales were up 33 per cent from a year earlier. But before the last recession, new-home sales typically reached 1 million a year.
The August results may have been elevated due to several special factors. Last month included more weekend days—prime buying periods—than July 2014 and August 2013. In addition, home sales fell off in the second half of last year as interest rates began to rise, meaning the year-earlier figures to which the latest results are compared are relatively low. Wednesday’s report showed the number of homes on the market fell sharply, a development that could bode well for the economy.
The Commerce report comes days after the National Association of Realtors said sales of previously owned homes—roughly 90 per cent of the market—slipped in August, ending four months of gains. The Realtors report is considered a more reliable barometer of the overall housing market because it reflects the majority of sales.