New Home Sales Rise In August, As Expected - September 25, 2013
Sales of new single-family homes rose in August, climbing to an annualized rate of 421,000 houses for the month. That represented a modest 7.9% gain from a year earlier. The comparison with the month before also was positive. The pace of sales was likewise in line with consensus expectations, which had such volume at 420,000 homes.
Still, the latest figures show that such sales, which improved from the 390,000 posted in July (initially estimated at 394,000 homes), were the second lowest of the year so far, eclipsing only the aforementioned July tally. By comparison, monthly sales were between 443,000 and 458,000, on an annualized basis, every month thus far this year save for May (429,000), July, and August.
So, clearly, the push to a somewhat higher level of mortgage rates and some concerns about a looming Federal Reserve monetary tapering are having an effect on housing demand. That said, results are not backtracking all that much and remain nicely above 2012 levels. The second half of that year, for example, saw monthly volume stay below 400,000 units.
Meanwhile, house prices continue to climb, with the median (or midpoint) price of a new home sold in August rising to $254,600. The average price, reflecting the inclusion of many high-priced properties in the total, was $318,900. Also, the seasonally adjusted estimate of new homes for sale last month was 175,000. That represented a supply of 5.0 months at the current rate of sales. That was down from July's 5.2 months, and was also well below the six months, or so, that is considered to be an average inventory level. Of note, at the bottom of the long housing down cycle, the supply of unsold houses had been up around one year.
Breaking the report down, we find that sales rose by 8.8% in the Northeast, by 19.6% in the Midwest, and by a quite strong 15.3% in the South, which is by far the country's largest sales region. Sales backed off in the West, though, falling by 14.6%.
Taken as a whole, this was a decent report. However, looked at in the full context of the year to date, it was nothing really special. It seems logical that the higher mortgage rates now in place are hurting sales somewhat, but not to the extent, as yet, to alter the long-term recovery track that we see continuing into 2014 and 2015, at least.
At the time of this article's writing, the author did not have positions in any of the companies mentioned.