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New Home Sales Bounce-Back in August a Nice Surprise
Sales of new single-family homes rose 4.1% in August to a seasonally adjusted annual rate of 1.050 million units, following substantial downward revisions to the sales rate for the previous three months, according to figures released by the U.S. Commerce Department last week. The preliminary sales pace for August was down 17.4% from a year earlier.
"The sales increase for August reported by the government was somewhat surprising," said NAHB President David Pressly. "However, mortgage rates have been coming down from mid-year levels and many builders are offering substantial incentives to bolster sales, making this a good time to buy."
"The bounce-back in new home sales certainly is a welcome development, although the reported increase was from a downwardly revised July level that was the lowest reading since March 2003," said NAHB Chief Economist David Seiders. "Many builders still have large inventories of unsold homes, and we expect to see aggressive use of sales incentives over the balance of the year."
"The near-term prospects for monetary policy and mortgage interest rates also will be supportive of housing demand going forward," Seiders added.
New home sales rose in August by 21.7% in the Northeast, 12.2% in the Midwest and 11.1% in the South; they were down by 17.7% in the West. All four regions, however, reported substantially lower sales on a year-to-date basis.
The inventory of new homes for sale decreased slightly to 568,000 units at the end of August, a 6.6 months' supply at the current sales pace. Completed homes for sale accounted for 26% of the inventory; units still under construction represented 55%; and units for-sale that were permitted but not yet started were nearly 19% of the inventory.
The median length of time that completed homes for sale were on the market was 3.6 months, the same as the two previous months and down from 3.7 months a year earlier.
 Attend the NAHB Construction Forecast Conference
Don't miss NAHB's fall Construction Forecast Conference for the latest economic news about the housing industry. Join NAHB on Oct. 25 for the Construction Forecast Conference — Fall 2006 in Washington, D.C.
If you can't attend in person, sign-up for the Webcast.
To register for either, visit www.nahb.org/cfc.
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Find out in HousingEconomics.com’s Long-Term Forecast.
HousingEconomics.com includes downloadable Excel tables featuring the housing starts forecast, GDP, demographics and more.
To learn more, visit www.housingeconomics.com.
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