New Homes Sales Have Best Month Since 2008

A newly-released report from the U.S. Census Bureau has shown that new home sales continued to grow in August, even after an upward revision to the number of home sales recorded in July. Sales of newly built, single-family homes rose by a seasonally-adjusted annual rate of 552,000 units, representing a 5.7% increase compared to last month. This makes August the best single month for new home sales since February of 2008!

While the overall national numbers are encouraging, not all regions posted positive sales growth. Indeed, when the gains are broken down by region, clear winners and losers emerge. Leading the way was the Northeast, which recorded a huge 24.1% increase in new home sales. Meanwhile, the South and West also posted respectable gains of 7.4% and 5.4%, respectively. On the other hand, the Midwest actually registered a 9.1% decline in sales. 

Although these numbers represent the best month for new home sales in over seven years, they still have yet to reach what is considered historically average. In fact, in the last 30 years, new home sales were typically around 706,000 units per month. However, August's growth does add significant momentum to the year's home sales as the summer months draw to a close. Furthermore, given the decision by the Federal Reserve not to raise interest rates, many economists believe that there could be an uptick in near-term home buying as prospective home owners try to lock in a low mortgage rate before the eventual rate hike.

Interest rates remain amazingly low, with the average rate on a 30-year fixed mortgage in August coming in at 3.9%. Just a decade ago, the rate was about 5.8%, while 20 years ago it was approximately 7.8%. The Fed is now expected to raise rates in either October or December, making the next month one of particular import for those seeking low interest rates on their mortgages.

Finally, the report indicates that the inventory of new homes for sale stood at 216,000 units in August, equaling a 4.7-month supply at the current sales pace.

Sources: New Home Sales Rise 5.7 Percent in AugustNew home sales highest since 2008.

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