New home sales rose 1.5% in August, above expectations, as prices continued to climb, the Census Bureau reported on Friday.
Homes sold at a seasonally adjusted annual rate of 740,000, up from the revised rate of 729,000 in July.
The median selling price of a new home has reached $ 390,900, down from $ 325,500 a year ago. At the current rate of sales, there is a six month supply of new homes for sale.
The report tracks Wednesday’s measure of existing sales, which fell 2% in August to a seasonally adjusted annual rate of 5.88 million.
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“August has historically been a slower month for sales than July, and this increase is encouraging and may indicate that the positive momentum that started in July may continue into the fall,” said Kelly Mangold of RCLCO Real Estate Consulting in a press release. “Manufacturers still have a strong backlog to overcome and this summer’s rise is a promising start for what could be a longer-term trend as supply chain issues begin to resolve. “
Housing has been a mainstay of the economic recovery from the coronavirus, but has cooled somewhat from its fiery pace at the start of this year. Buyers are struggling to find affordable housing, while builders are constrained by shortages of materials and labor.
“New home sales were below levels of a year ago in August, for the third consecutive month,” Danielle Hale, chief economist at Realtor.com, said in a statement. “The factors supporting housing – a large number of young households nearing the maximum age to buy a home, greater flexibility to work remotely which has broadened the areas that buyers are willing to consider and mortgage rates still low – have kept the recent pace of new home sales above annual totals for each year from 2008 to 2019. “
“Buyers are showing signs of having moved beyond the ‘house at any cost’ mentality as rising home prices mean buying a home – whether new or existing – requires a bigger share of the typical American’s salary, ”Hale added.
Although the supply of new homes has improved, many are under construction or have yet to start, she noted, making them less desirable options for first-time buyers. house that may be looking to move out quickly.
The housing data is consistent with an economy that has downgraded from its scorching pace at the start of the year. The Federal Reserve’s monetary policy committee on Wednesday lowered its 2021 projections for gross domestic product growth to 5.9% from its previous estimate of 7%. The Fed, however, raised its projections for 2022 to 3.8% from its previous estimate of 3.3%.
“While we expect growth momentum to slow, temporary forces from the Delta variant have accentuated the moderation in activity between August and September,” BCA Research said in a note to clients on Friday. Reports note that health concerns are weighing on the service sector, where new business has slowed to a 12-month low in the United States. Likewise, labor supply and material shortages slow down manufacturing output and increase the backlog. Meanwhile, supply chain disruptions and rising transportation costs increase price pressures. Higher input costs are passed on to customers under the form of an increase in product prices.