New home sales spiked 18 percent in August to a 504,000-unit pace with upward revisions to previous months’ data. Much of the increase was concentrated in the Northeast and West. Inventories also rose.
New Home Sales Reach Highest Level Since 2008
New home sales posted a stronger-than-expected reading in August, jumping 18 percent. The increase was largely due to
sizeable gains in the Northeast and West, which increased 29.2 percent and 50 percent, respectively. Upward revisions to data in the three previous months were a welcome surprise and should alleviate some of the worry around the slower housing recovery. Inventories are up 16 percent over the past year.
New Home Sales Activity Should Continue to Improve
With sales showing strong gains in the highly-priced Northeast and West, average home prices increased during the month.
Median home prices, however, followed the trend in other price measures, falling 1.6 percent in August. Today’s report corroborates the solid gains in builder sentiment over the past three months. Our outlook remains unchanged for the housing market, and we continue to expect a gradual improvement.