US new home sales rose more than forecast in August, hitting a four-month high, suggesting that demand is stabilizing as home builders make progress in reducing backlogs.
New single-family home purchases rose 1.5% to an annualized pace of 740,000 after revised upward of 729,000 in July, government data showed on Friday. The median estimate in a Bloomberg poll of economists called for a rate of 715,000.
The residential real estate industry is facing a number of countercurrents. While underlying demand is solid, construction companies are struggling to fulfill their orders due to unstable supply chains and difficulty finding workers. The growth in sales in August was driven by a pick-up in the homes that have not yet started, suggesting that construction activity will remain stable over the coming months.
The report, produced by the US Census Bureau and the Department of Housing and Urban Development, showed the average sales price of a new home at a record $ 390,900. Of the homes sold in August, about 22% were $ 500,000 to $ 749,000 and 9% were $ 750,000 or more.
At the end of August, 378,000 new homes were up for sale, most since October 2008. While more than a quarter of those had not started, the number of properties completed and under construction rose and showed modest progress on building permit arrears.
At the current rate of sales, it would take 6.1 months to exhaust the supply of new apartments, compared to 6 months in July and 3.6 months at the beginning of the year.
A pedestrian walks past a new home built by Pardee Construction LLC in the community built by the Pacific Highlands Ranch Master Plan in San Diego, California, United States on Monday, August 31, 2020. US homebuyers prefer newly built homes for the highest price in more than a decade. Photographer: Bing Guan / Bloomberg
Bing Guan / Bloomberg
Transport bottlenecks and increased input costs at the beginning of this year have caused construction companies like Lennar Corp. and KB Home and contributed to a rise in house prices.
"The supply chain for both land and construction is heavily loaded and will continue into the fourth quarter and beyond," said Stuart Miller, Executive Chairman of Lennar, on the company's September 21 conference call.
Miller said, “The industry will not be able to quickly resolve supply bottlenecks by increasing production. Accordingly, we expect the market to remain in its current equilibrium, or should I say imbalanced, for a longer period of time. "
Still, wood prices have fallen after rising earlier in the year due to a pandemic-induced mismatch between supply and demand. A measure of builder sentiment rose in September for the first time in five months, the National Association of Home Builders said in a report on Monday.
While mortgage rates are historically low, some potential buyers shy away from high home prices. Only 29% of respondents in a recent consumer survey said now is a good time to buy a home, less than half of people at the start of the year.
Sales increased in three out of four US regions. In the south, the largest region, purchases soared to a four-month high, while in the west, sales were the strongest since January. New home construction accounts for around 10% of the market and is calculated when the contract is signed. They are considered a more up-to-date barometer than the purchase of old property, which is calculated when the contract is concluded. The data on new homes are volatile; The report showed a 90 percent confidence that the change in sales ranged from a decrease of 13.6% to an increase of 16.6%.