According to recently-released government statistics, in August, new home sales in the United States shot up 20.5% from July. This increase represents the highest level of new home sales since January 2022. For U.S. Census Bureau those numbers, it was a strong testimony to the booming housing market, as the economy continues to dynamically adjust with ups and downs.
This jump in sales is indicative of continuing strong demand, especially across the Northeast and South regions. These conditions resulted in much larger swings in numbers for the Northeast, which although characterized by low overall new construction, experienced strong sales activity. At the same time, the South continues to be the most active region for homebuilding, helping crank out solid sales numbers.
That said, Mr. Robert Dietz, chief economist at the National Association of Home Builders, was surprised by the magnitude of the increase.
“We were expecting a gain but not that large.” – Robert Dietz
Sales in the West underperformed because of elevated home prices. The region’s soaring housing costs are compounding that, making it difficult for people to afford to purchase new homes. Consequently, sales have continued to be lackluster.
The median price of newly sold homes in August was $413,500, a 1.9% year-over-year increase. While this increase in prices seems minimal, it demonstrates an ongoing trend of increasing expenses in the housing market.
The inventory of new homes for sale reached a 7.4-month supply in August. This reduction represents a 17.8% drop from July’s 9-month supply. The shrinking stock only underscores the deep demand for new housing out there.
Peter Boockvar, an independent economic analyst, noted the role that builder incentives have played on sales performance.
“While a volatile figure each month and always best to smooth out, I have to believe that the elevated level of home builder incentives was the main catalyst for the large upside surprise to new home sales.” – Peter Boockvar