New-home sales increased for the second consecutive month, up 1.5% to a pace of 740,000. Year-over-year, sales are down for the third month in a row.
Market breakdown:
New-Home Sales: 740,000
For-Sale Inventory: 378,000
Months’ Supply: 6.1 months
Median Price: $390,900
What the industry is saying:
“Sales of new homes registered below year-ago levels, for the third time in a row, but notched a second consecutive monthly gain, rising 1.5% to a pace of 740,000. Factors that are favorable for housing—a large number of young households near peak home-buying age, greater flexibility to work remotely that’s expanded the areas homebuyers are willing to consider and still low mortgage rates—have kept the recent new home sales pace above annual totals for each year from 2008 to 2019 and also contributed to the uptick this month.
“Nevertheless, the pace remains below highs seen earlier this year. Buyers show signs of having moved past a ‘land-a-home-at-all-costs’ mentality as rising home prices mean purchasing a home—whether new or existing—requires a larger share of the typical American’s paycheck. In fact, the median new single-family home sales price was $390,900 in August, up 20% from a year ago. Consumers this summer were recalibrating priorities, balancing the resumption of travel, vacations and dining out with big-ticket budget items like home-buying or renting—and doing so in the face of rising costs on just about everything. Additionally, many items remain unexpectedly hard to come by, including, in some cases, new homes.
“Months supply of new homes is higher than that of existing homes, (6.1 vs. 2.6 months) suggesting that there are an ample number of new homes for sale, but this comes with a big caveat. Many for-sale new homes are either under construction or not-yet-started—more than 90% in August. In other words, they’re not quite move-in ready, a less than ideal choice for buyers eager to get settled, especially when difficult-to-predict supply chain challenges make it harder to target new home completion dates. While the existing-home market may be a better choice for buyers with strict timelines for moving, those who can afford to wait may find relatively more options and somewhat less competition among yet-to-be-started new homes.” — Danielle Hale, Chief Economist, realtor.com®
“New-home sales increased for the second month in a row in August, mirroring gains seen in starts, which also increased this month. Robust demand continues to fuel strong sales, and interest rates have remained low, helping to counteract high sales pricing. August has historically been a slower month for sales than July, and this increase is encouraging and may indicate that the positive momentum that began in July may continue through fall.
“Builders still have a robust backlog to get through and the uptick this summer is a promising start to what may be a longer-term trend as supply chain issues begin to resolve. RCLCO expects home sales to remain strong overall because demographic factors continue to be favorable for the housing market as millennials hit peak family-formation years. Lingering effects of the pandemic have increased demand for larger living spaces and access to the outdoors, and the additional flexibility to work remotely or to return to a hybrid work schedule has expanded the area where households are seeking to purchase a home as commute time becomes less of an issue.” — Kelly Mangold, Principal, RCLCO Real Estate Consulting
