Steel Markets

New Home Sales Are Solid In August

September 26, 2016

Sales of new single-family homes fell 7.6 percent month-over-month but were 20.6 percent higher on a year-over-year basis, according to data released by the Department of Commerce. August sales were at a seasonally adjusted rate of 609,000, compared to the upwardly revised rate of 659,000 in July and 505,000 in August 2015.

The August dip was less than forecast by analysts at Reuters who were expecting sales to be down to 600,000 for the month. The revision to the previous month’s estimate put July sales at the highest annualized level since October 2007. Despite the month-over-month decline, August sales continued to indicate a solid market following July’s surge.

On a three month moving average, sales increased 1 percent in August, another indication of a steady market.

The median sales price in August was $284,000 with the average sales $353,600. There was estimated 235,000 new homes for sale at the end of August representing a supply of 4.6 months at the current sales rate.

Regionally, home sales slipped month-over-month in all regions except the West where sales gained 8 percent from July. The Northeast was hit hardest with a 34.3 percent MoM decline followed by the South at -12.3 percent and Midwest at -2.4 percent. Compared to August 2015, the Midwest was up 39.7 percent, the West 35.0 percent, and the South 15.9 percent. The Northeast on a year-over-year basis fell 18.8 percent.

“Given the huge jump in sales in July, the August reading remains robust,” said Ed Brady, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Bloomington, Ill. “Sales are up 21 percent from August last year and year-to-date they are running 13 percent higher, indicating that the housing recovery remains firmly on track.”

“A low supply of homes, a broadening of the market with additional sales growth in lower price points and rising household formation all point to a growing demand for housing as we move into 2017,” said NAHB Chief Economist Robert Dietz.