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First Cut: Sales of new single-family homes jump in August

Sales of new single-family homes jumped 7.1% in August and were up 18.0% compared to August 2018. Declines in mortgage interest rates have helped spark a revival in homebuying. Consumers are electing to buy new construction due partly to limited supplies of the most sought-after units in size and price in existing stock, and because builders have responded to shortage to meet that demand.

 

Prices for new homes were up sharply in August, 7.5% higher than the prior month at $328,400, suggesting that consumers were buying at a higher price point while home affordability was boosted by low mortgage rates. Home prices were up 2.2% compared to a year ago. Sales were up for units in the upper end of the price ranges ($400,000 and above) and slightly softer for mid-price units ($150,000-399,999).

Consumers also were more inclined in August from the prior month to purchase units not yet started (+20.2% to 220,000) and units already build (+10.4% to 265,000), but not units currently under construction (-6.2% to 228,000).

Sales of new single-family homes were uneven across regions. There were declines in the Northeast (-5.9%) and Midwest (-3.0%) and solid gains in the South (+6.0%) and West (+16.5%).

The supply of new homes available for sale fell to 5.5 months’ worth, down from 5.9 months in the prior month and well below the 6.3 months in August 2018.

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