It appears that new home sales have fully shaken off the period of declines that saw sales drop in April, May, and June. That streak ended in July when new home sales held steady. And things got even better in August.
According to new data from the Census Bureau and the Department of Housing and Urban Development, sales of newly built, single-family homes rose 1.5% in August over July.
The increase shouldn’t come as much of a surprise as a recent report from the Mortgage Bankers Association showed that mortgage applications for new home purchases rose by 9% in August. August also marked the first time that new home demand had risen since March.
While August’s new home sales rose over July, it still ran well behind last year’s totals. According to the report, new home sales in August 2021 were more than 24% lower than they were in August 2020.
However, analysis from the National Association of Home Builders shows that new home sales are actually up for the year, running 2.4% ahead of 2020 through August.
“New home sales stabilized in late summer following a cooling trend that took hold last winter,” NAHB Chairman Chuck Fowke said. “Builder sentiment remains strong and housing demand is being supported by ongoing low mortgage interest rates and a shortage of existing home inventory.”
While existing home inventory may still be lower than normal, new home inventory is on the rise. According to the NAHB, new home inventory in August 2021 was 74.3% higher than it was in August 2020.
Couple that with increasing demand for new homes and August’s increase in new home sales may not end up being an outlier. Time will tell.