Latest New Home Sales

In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses new home sales.

• Sales of new homes jumped 8.3% from July to August to a seasonally adjusted annualized rate of 421,000.  This was an important, though soft improvement from last month’s sharp downward movement and revisions to the two prior months.  While there were again downward revisions to the estimates for July and June, they were not as large as the re-estimates done in July.
• Sales of new homes have been constrained by low inventories for several quarters, though.  The months' supply of new homes jumped in July, but eased to 5 months in August, well below the 6.5 months that would be more indicative of a market in balance.
• Low inventories place upward press on the median price, which was $254,600 in August, the 14^th consecutive year-over-year increase.   The median existing home price was 20.0% lower at $212,200, above the historical average spread of a 12.3%, suggesting that existing homes are a bargain by historical standards.
• The sharp increase in mortgage rates during the late spring has had an impact on new home sales.  New sales remain constrained by low production though, which in turn weighs on job creation and creates price spikes in some markets where inventories are particularly low.  Still, this month’s movement upward in sales and steady in prices suggests that consumers are adjusting to the higher rate environment and sales will continue at a more subdued level that is stronger than recent years and more in line with historical norms.