U.S. sales of new homes surged in August, led by a wave of buying in the West and Northeast.
The Commerce Department says new-home sales climbed 18% last month to a seasonally adjusted annual rate of 504,000. The report also revised up the July sales rate to 427,000 from 412,000.
The result is “well ahead of even our own above-consensus forecast,” wrote CIBC World Markets economist Avery Shenfeld in a note to analysts.
“It marks a new post-recession high, but to put things into perspective, is still a far cry from the [1-million] plus figures we were seeing pre-2007,” he added.
Newly constructed homes sold at the fastest clip since May 2008. It’s a clear sign of improvement for a real estate market that has been muddled in recent months, as the rebound in sales following the housing bust began to slow.
Sales of new homes are up 33% over the past 12 months. Median prices for new homes have risen nearly 8% during the same period to $275,600.
“All is not perfect in the housing market but things are certainly better today than they were about one year ago,” says Dan Greenhaus, chief strategist at BTIG brokerage.
In the West, August purchases of new homes soared 50% compared to the prior month. Off the sharp August increase, sales in the West have nearly doubled in the past 12 months.
Between August and July, sales grew 29.2% in the Northeast. Buying increased 7.8% in the South and remained flat in the Midwest.
The housing market has been sputtering for much this year. A nascent recovery in sales and prices began to struggle toward the middle of 2013. Ferocious winter weather delayed construction and limited sales at the beginning of 2014. Buying did pick up over the summer. Yet the pace of sales has been depressed by sluggish wage growth and the price surge last year that put homes out of reach for many Americans.
There are a number of signs that another housing uptick may be in the works.
The National Association of Home Builders/Wells Fargo builder sentiment index climbed in September to 59, the highest reading since November 2005. Readings above 50 indicate more builders view sales conditions as improving.
That has yet to translate into more construction, however.
In August, homebuilding fell 14.4% compared to the prior month to a seasonally adjusted annual rate of 956,000 houses and apartment complexes, according to the Commerce Department.
Much of that decrease was in the volatile apartments sector. Homebuilders started single-family houses at an annual rate of 626,000 last month, slightly below the pace of 631,000 in August 2013.
Existing home sales have also eased back compared with last year’s pace.
Purchases of existing homes fell 1.8% to a seasonally adjusted annual rate of 5.05 million in August, the National Association of Realtors says. Sales fell from a July rate of 5.14 million, a figure that was revised slightly downward. Overall, the pace of home sales has dropped 5.3% year-over-year.
Shenfeld says the numbers are good news for the U.S. dollar and related building materials but should drive U.S. Treasury Bill values lower.