US new home sales surge to fastest pace since 2006 as housing market shines through pandemic
- Sales of new US homes accelerated by 4.8% to an annual rate of 1 million units in August, the Census Bureau reported Thursday.
- That pace is the highest since 2006 and marks four consecutive months of increasing sales.
- The agency’s estimate of new homes for sale fell to 282,000, reflecting 3.3 months of supply at the current pace of sales. That’s the shortest period in data going back to 1963.
- Though the housing market has been one of the few bright spots in the virus-rattled economy, some fear dwindling supply will soon halt the sector’s rally.
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The US housing market extended its winning streak into August as Americans continued taking advantage of record-low mortgage rates.
Sales of new homes leaped 4.8% to a seasonally adjusted annual rate of 1.01 million units, the Census Bureau announced Thursday. The pace now stands at its highest level since 2006 after four months of increases. Economists surveyed by Bloomberg expected the rate to drop last month to 890,000 units.
New homes’ median sale price fell from the year-ago period to $318,000. The average sales price was $369,000.
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July’s jump was revised higher to a 14.7% gain.
The Thursday report also revealed a growing strain in housing supply. The seasonally adjusted estimate of new homes for sale fell to 282,000 from 291,000. The latest reading represents a supply of 3.3 months at the housing market’s current rate of sales, the shortest period in data going back to 1963.
The housing market has been one of the few corners of the economy enjoying a V-shaped rebound through the coronavirus pandemic. The Federal Reserve’s decision to push interest rates close to zero in March lowered mortgage rates and spurred a pickup in home sales. The central bank’s subsequent messaging that rates will stay low for years added fuel to the market resurgence. Yet some fear the sharp rally is on its last legs.
“While strong demand and lower mortgage rates are supportive of home sales, the slow recovery and weak labor market pose downside risks that we expect will weigh on home sales in the months ahead,” Nancy Vanden Houten, a researcher at Oxford Economics, said.
For the time being, other indicators point to lasting demand in the sector. Homebuilder optimism reached an all-time high in September, according to the National Association of Home Builders/Wells Fargo Market Index. Sales of existing homes have trended in-line with new-unit purchases through the summer as well.
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