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Sales of new homes shot up dramatically in August, according to data from the United States Census Bureau released Tuesday.
Sales of new single family homes clocked in at a seasonally adjusted annual rate of 685,000 — 28.8 percent higher than the July figure of 532,000, but 0.1 percent down from August 2021, according to the new data.
The month-over-month increase in sales follows a steep drop, with sales falling 12.6 percent between June and July, a 29.6 percent annual decline from the same period in 2021, the data shows.
Some economists speculated that the steep bump in sales was a result of buyers rushing to get into the market before mortgage sales rise even further. Mortgage rates surpassed 6 percent for the first time since 2008 in mid September.
“The unexpected bump in new home sales activity may be reflecting buyers who rushed into the market to get ahead of rising mortgage rates,” Bright MLS chief economist Lisa Sturtevant said in a statement.
Despite the August surge Sturtevant predicted sales would remain slow throughout the rest of 2022 as a result of a slowdown in construction.
“Despite the August bump, new home sales will likely be sluggish throughout the rest of the year,” Sturtevant said. “New single-family housing construction has stalled, residential building permits are down, and homebuilder confidence has tanked as builders face growing costs, higher interest rates, and slower buyer traffic.”
The median sale price for a newly constructed home hit $436,000 in August, while the average sale price hovered at $521,800, according to the Census data, both down from July when the median sale price was $439,000 and the average was $546,800. The price of a new home has fluctuated wildly this year as a result of an unpredictable supply chain, and the price reductions seen in August are not necessarily permanent, NerdWallet home expert Kate Wood pointed out in a statement.
“This number has swung back and forth throughout 2022 as supply chains and materials costs remain unpredictable,” she said. “With higher interest rates pushing up the cost of borrowing, the burgeoning inventory of new homes is unlikely to relieve many homebuyers’ woes. While August’s trends reversed what we saw in July, there’s no reason to think the pendulum won’t swing right back.”