New-Home Sales Bounce Back In August
Sales of new single-family homes rose 4.1 percent in August to a seasonally adjusted annual rate of 1.050 million units, following substantial downward revisions to the sales rate for the previous three months, according to figures released by the U.S. Commerce Department reported today. The preliminary sales pace was down 17.4 percent from a year ago.
“The sales increase for August reported by the government was somewhat surprising,” said National Association of Home Builders (NAHB) President David Pressly, a home builder from Statesville, N.C. “However, mortgage rates have been coming down from mid-year levels and many builders are offering substantial incentives to bolster sales, making this a good time to buy.”
“The bounce-back in new home sales certainly is a welcome development, although the reported increase was from a downward-revised July level that was the lowest reading since March 2003,” said NAHB Chief Economist David Seiders. “Many builders still have large inventories of unsold homes, and we expect to see aggressive use of sales incentives over the balance of the year.”
“The near-term prospects for monetary policy and mortgage interest rates also will be supportive of housing demand going forward,” Seiders added.
Three of four regions across the country posted increases in pace of new homes sales in August. Sales were up in the Northeast by 21.7 percent, in the Midwest by 12.2 percent and in the South by 11.1 percent. The sales rate in the West was down by 17.7% for the month. All four regions reported substantially lower sales on a year-to-date basis.
The inventory of new homes for sale decreased slightly to 568,000 units at the end of August, a 6.6 months’ supply at the current sales pace. Completed homes for sale were 26 percent of the inventory. Units still under construction represented 55 percent of the inventory, and units for-sale that were permitted but not yet started represented nearly 19 percent of the inventory level.
The median length of time that completed homes for sale were on the market was 3.6 months, the same as the two previous months and down from 3.7 months a year earlier.