According to a Reuters report, sales of new single-family homes in the US increased substantially in August, reaching the highest level seen in more than six years. This offers good confirmation that the housing recovery is still continuing, and this should hopefully allay some expert’s fears that the market was weakening.
According to the Commerce Department, sales increased by 18% reaching a seasonally adjusted annual rate of 504,000 units. This is the highest level seen since May 2008 and is the second consecutive month of gains. The National Association of Home Builders agree this increase in sales activity matches with their latest surveys which show builders are seeing more interest in properties, and there are increasing numbers of serious buyers who are looking round for single-family homes. The Association also agrees this is a good sign that the housing recovery is moving forwards. It feels that historically low mortgage rates, combined with better job prospects and economic growth, and the fact that new home prices still remain attractive should keep the property market moving forward this year.
Sales figures for July were also revised showing a 1.9% increase compared to previous figures which showed a 2.4% decline. Last month’s figures are higher than expected, as the economists polled by Reuters had forecast new home sales of just 430,000 units. Even though sales of new homes only account for 9.1% of the real estate market these figures are significant, and it’s hoped they will turn around fears that the housing market was weakening after home sales of existing properties declined last month.
In August new home sales increased 50% in the West, reaching their highest level since January 2008. Sales in the South rose by 7.8%, reaching the highest level seen for 10 months. In the Northeast sales rose by 29.2%, but figures were flat for the Midwest.
Even though sales of new homes rose considerably last month, the stock of new property at its highest level for years. The inventory level of new homes for sale last month was 203,000. At the current pace of sales it would take just 4.8 months to clear the current supply of properties on the market, compared to 5.6 months the previous month. A healthy supply is normally considered to be six months, creating a balance between supply and demand.