New-home sales cool, supply jumps as storms strike South
A second straight decline in purchases of new homes, combined with downward revisions for prior months, show a tepid market as results begin to be clouded by the fallout from Hurricanes Harvey and Irma, according to government data Tuesday.
Single-family home sales fell 3.4% month-to-month to a 560,000 annualized pace (the estimate was 585,000) after a 580,000 rate (revised from 571,000). The supply of homes at the current sales rate rose to 6.1 months, the highest since July 2014; 284,000 new houses were on the market at end of August, the most since May 2009. Purchases fell in three of four U.S. regions, led by a 4.7% decrease in the South; unchanged in the Midwest.
While data aren't available at the state or local level, areas in Texas and Florida affected by Harvey and Irma accounted for about 14% of single-family housing units authorized by permits in 2016, the Census Bureau said in a special notice. If no sales information is received by the government, the units' status is assumed to be unchanged.
It may be hard to get a clear read on the market's underlying trends in the next few months as economic data become volatile thanks to three major hurricanes: Harvey in southeast Texas in late August, Irma in Florida in early September and Maria in Puerto Rico last week.
Even without the impact of the storms, rising prices were crimping affordability, especially for younger, first-time buyers who also find it harder to get credit. At the same time, steady hiring and low borrowing costs are likely to keep underpinning demand in what’s been a gradual housing recovery.
New-home sales, tabulated when contracts get signed, account for about 10% of the market. They're considered a timelier barometer than purchases of previously owned homes, which are calculated when contracts close and are reported by the National Association of Realtors.
Median sales price increased 0.4% year-to-year to $300,200. The net revision for May-July reduced home sales by 19,000. The government corrects sales prices for October 2014 to January 2017 to include additional data; the monthly median and average prices were revised downward about 1.2% on average.
The report said there was 90% confidence that the change in sales last month ranged from a 16.4% drop to a 9.6% increase, underscoring the volatility of the data. The report was released jointly by the Census Bureau and Department of Housing and Urban Development.