Economic Snapshot: New home sales at six-year high
New and existing home sales are on our minds this week, and the reports could not be more different this month. While new home sales saw record breaking numbers, existing home sales lost the consistent growth it had seen throughout the earlier summer months.
New home sales
New home sales in August were at a seasonally adjusted rate of 504,000, an 18 percent increase from 427,000 in July and 33 percent above the 379,000 in August 2013. This is the highest rate of new home sales since May 2008. July’s sales were revised to show a 1.9 percent gain, opposed to the previously reported 2.4 percent decrease.
The inventory of new houses for sale rose to 203,000, at their highest level in four years, but the number of months it would take to clear the supply dropped to 4.8 months, down from 5.6 months in July and 5.5 months in August 2013. Six months’ supply is typically seen as the healthy balance between supply and demand in the market.
These numbers coincide well with builder confidence, which was recently reported at its highest levels in eight years.
Existing home sales
Existing home sales declined 1.8 percent in August, down to 5.05 million from a seasonally adjusted rate of 5.14 million in July. This report follows four months of consecutive growth. Sales are at the second-highest pace in 2014 but remain 5.3 percent below the level of sales in August 2013.
The median existing-home price for all housing types was $219,800 in August, 4.8 percent higher than prices in August 2013. This is the 30th consecutive month of year-over-year price gains.
Distressed homes represented eight percent of August sales, down from 12 percent in the previous year and the second consecutive month in the single digits. Six percent of August sales were foreclosures and two percent were short sales.
Total housing inventory decreased 1.7 percent to 2.31 million in August. However, unsold inventory has increased 4.5 percent YOY, when there were 2.21 million existing homes available for sale.
