August saw a slight uptick in new-home sales, which rose 1.5% to a seasonally adjusted annual rate of 740,000 units, according to data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
July’s figure was upwardly revised as well, putting sales for that month at a rate of 729,000 units. August’s sales rate is the fastest since April, but it’s down 24.3% annually, showing that the new-home market has left its summer sales backtrack behind, but has cooled from the scorching heights of last fall and earlier this year.
“New home sales stabilized in late summer following a cooling trend that took hold last winter,” said Chuck Fowke, chairman of the National Association of Home Builders (NAHB). “Builder sentiment remains strong and housing demand is being supported by ongoing low mortgage interest rates and a shortage of existing home inventory.”
Sales likely would have been even stronger if not for the ongoing supply and labor shortages builders are currently facing. Inventory has grown to a balanced level of 6.1 months’ supply, 74.3% higher than August last year. That figure, though, is comprised of a rising share of homes that haven’t started construction yet. Twenty-eight percent of new-home inventory consisted of such homes in August, up from 21% in the same month last year. During August, the number of homes sold but not yet started grew to 263,000.
Prices remain steadily and significantly on the rise. The median price of new homes climbed to $390,000 in August, up 20.1% annually, or $65,400 over the past 12 months alone. The NAHB attributed much of that price jump to higher development costs, including the rise of material costs during the input shortage.
“Home prices are up 20% from a year ago due to higher construction costs,” said NAHB chief economist Robert Dietz, “and these price hikes are a risk for housing affordability as we approach the end of the year.”
