New single-family home sales surged in August, as housing demand was supported by low interest rates, a renewed consumer focus on the importance of housing, and rising demand in lower-density markets like suburbs and exurbs.
Census and HUD estimated new home sales in August at a 1.01 million seasonally adjusted annual pace, an approximate 4.8% gain over revised July rate of 965,000 and is 43.2% above the August 2019 estimate of 706,000. This is the strongest seasonally adjusted annual rate since September 2006.
The gains for new home sales are consistent with the NAHB/Wells Fargo HMI, which soared to an all-time high of 83 in September, demonstrating that housing is the leading sector for the economy. Consider that despite high unemployment, new home sales are estimated to be 14.9% higher for the first eight months of 2020 compared to the first eight months of 2019.
Sales-adjusted inventory levels declined again, falling to a just a 3.3 months’ supply in August, the lowest in the history of the data series back to 1963. This factor points to additional construction gains ahead. The count of completed, ready-to-occupy new homes is just 54,000 homes nationwide. Total inventory declined almost 40% year-over-year, with inventory down to 282,000.
Moreover, sales are increasingly coming from homes that have not started construction, with that count up 69% year-over-year, not seasonally adjusted (NSA). In contrast, inventory of for-sale completed ready-to-occupy homes are down almost 33% year-over-year (NSA). These measures point to continued gains for single-family construction ahead.
Thus far in 2020, new home sales are higher in all regions. Sales on a year-to-date basis are 12% higher in the West, 14% in the South, 24% higher in the Midwest and the Northeast.