Sales of new homes rise more than forecast as rates fall
Sales of new homes rebounded at a faster pace than forecast in August as a decline in mortgage rates sparked demand for higher-priced properties.
Single-family home sales climbed 7.1% to a 713,000 annualized pace, surpassing all estimates in a Bloomberg survey of economists, after an upwardly revised July selling rate, Commerce Department data showed Wednesday. The median sales price increased 2.2% from a year earlier to $328,400.
The data add to other positive signals recently for a housing market that struggled in 2018 and into this year. Mortgage rates are a big part of the picture, as they slipped earlier this month to the lowest level since 2016.
The report showed more expensive homes, those priced $400,000 and up, represented a larger share of unadjusted sales in August. The share of new houses with asking prices below $400,000 eased.
The data are consistent with other housing market indicators. Existing-home sales, which make up about 90% of transactions, rose to the highest level in more than a year. Housing starts jumped unexpectedly in the month as well, surging at the fastest pace since mid-2007 and indicating residential construction may contribute to economic growth for the first time since the end of 2017.
The supply of homes at the current sales rate dropped to 5.5 months, from 5.9 months in July. The number of new homes for sale at the end of the month declined to 326,000, the fewest since September 2018.
The number of properties sold for which construction hadn't yet started rose, indicating a bigger backlog for builders.
Purchases of new homes increased in the South and West.
Economists in Bloomberg's survey projected a 659,000 annualized pace for August sales after a previously reported 635,000 rate in July.
New-home purchases account for about 10% of the market and are calculated when contracts are signed. They are considered a timelier barometer than purchases of previously owned homes, which are calculated when contracts close. The figures tend to be volatile.
The report is published jointly by the Census Bureau and Department of Housing and Urban Development.
Changes in the seasonally adjusted data are volatile and have a wide margin of error. There's a 90% chance that the monthly percentage change was between a 13.2% decline and a 27.4% increase, according to Census.