August’s new residential sales reached a record high not seen since 2006, according to the U.S. Census Bureau and the Department of Housing and Urban Development’s latest new home sales report released on Thursday.
New home sales increased 43.2 percent year-over-year to a seasonally-adjusted annual rate of 1,011,000 — 46,000 above July’s revised rate and 305,000 above August 2019’s rate. The median sales price of homes sold in August was $312,000, while the average sales price for all listings was $369,000.
Realtor.com Chief Economist Danielle Hale said the boom in new home sales is due to buyers taking advantage of historically low-interest rates.
“Sales of new homes broke the 1 million mark for the first time since 2006, rising 43.2 percent from last year and up 4.8 percent from an upwardly revised July figure, as home shoppers hurried to take advantage of low mortgage rates and perhaps make a move to secure new virtual learning space as the new school year started in August,” Hale said in an emailed statement sent to Inman. “New home sales continue to come in much higher than one year ago, making up for a weak spring season.”
Even with low-interest rates pushing buyers to the market, Hale said the strength of August’s new home sales pace was surprising, considering the major headwinds the market has faced during the coronavirus pandemic.
“The strength of activity, a surprise given other weaker economic readings such as in the jobs market, was generally pushing prices up, but this month showed a drop of 4.3 percent from a year ago in the price of the typical new home sold,” she explained.
Hale said much of August’s sales success can be attributed to active real estate markets in the Midwest and South, where the new home sales pace increased more than 50 percent from 2019.
“This is not necessarily a sign of easing prices, but more likely the result of sales surges in the affordable Midwest and South regions which were each up 50 percent or more from a year ago, while new home sales in the pricier Northeast and West were up only 26 to 27 percent,” she added. “This means sales in the Midwest and South made up nearly 73 percent of sales this August compared with just shy of 65 percent at this time last year.”
Nerdwallet Home and Mortgage Expert Holden Lewis said the new homes will be what pushes the housing market forward in the upcoming months as existing-homes inventory has declined 18.2 percent last year.
“Six months ago, few would have guessed that more new homes would be sold this summer than last summer,” Lewis said in a statement to Inman. “But that’s what happened. People bought new homes when they couldn’t find suitable existing homes for sale.”