Sales of newly-built, single-family homes fell 7.6% on a monthly basis in August to a 609,000 seasonally adjusted annual rate according to estimates from the Census Bureau and HUD. However, the monthly change masks the fact that the August pace of new home sales was the second strongest since the end of the Great Recession.
New home sales for August were almost 21% stronger than August of 2015, and on a year-to-date basis, sales of new single-family homes are 13.3% higher than this time last year. The trend is rising for new home sales, and NAHB expects continued growth in the year ahead given tight new and existing home inventories.
Inventory did manage a slight gain in August. However, with just 235,000 homes for sale (seasonally adjusted), at the current sales pace there exists a thin 4.6 months’ supply.
On a non-seasonally adjusted basis, there were only 56,000 completed, ready-to-occupy homes on the market as of August.
A broadening of the supply mix also continued for the new, single-family home market. Median sales price of new home sales fell from $300,200 from August 2015 to $284,000 last month. On a distributional basis, in August of 2015 29% of sales occurred in the $200,000 to $300,000 price range. Last month, this share increased to 37% of sales, with the $300,000 to $400,000 range falling from 25% to 20%.
The regional numbers reveal strong gains in the West, with sales up 35% from the pace recorded in August 2015. This is consistent with the recent gains in the West for the NAHB/Wells Fargo Housing Market Index.
Overall, the August numbers were solid, declining less from a cycle high pace set in July than many analysts expected. Inventory remains tight and continues to support our forecast of continuing single-family construction gains into 2017. Demand should continue to grow, and industry growth will be limited by supply-side concerns, most notably lack of labor and lots. The third “L” of the supply-side of the market (AD&C lending), continues to expand, with residential construction loans up more than 16% over the last year.