The housing market continued to boom in August, as low mortgage rates and pandemic-driven demand pushed new home sales above 1 million for the first time in 14 years.
Sales of new single-family homes rose 4.8% in August from July to a seasonally adjusted annual rate of 1.01 million, the Commerce Department said Thursday. Economists polled by the Wall Street Journal had expected a 0.3% decline to 898,000. August sales were 43% above the year-earlier level.
The new-homes data are volatile and August’s figures came with a margin of error of 10.5 percentage points. July sales were revised up to 965,000 from 901,000 initially.
Based on the current rate of sales, there is a 3.3-month supply of new homes, down from 4 months in July, 4.6 months in June and 5.4 months in May.
“Strong sales have depleted inventories of new homes for sales, which fell to their lowest level in three years,” said Oxford Economics’ Nancy Vanden Houten. That represents a record low for the metric and should support construction in the months ahead even if demand softens, especially as home-builder sentiment remains strong.
SPDR S&P Homebuilders ETF
(ticker: XHB) rose following the report, up 0.1% to $51.55 in midmorning trading.
The median price of a new home was $312,800 in August, down from $327,000 the same month a year earlier.
Separately, Freddie Mac on Thursday reported that the average rate on a 30-year fixed-rate mortgage edged up to 2.9% in the week ended Sept. 24, from 2.87% the week prior.
“Mortgage rates set several record lows over the last few months and have remained low into September,” said Sam Khater, Freddie Mac’s chief economist. “While there is room for rates to decrease even more, higher home prices and low inventory could potentially stifle the high demand that we’ve been seeing.”
Write to Brian Hershberg at [email protected]