New Home Sales Decline in August, Yet Year-Over-Year Growth Remains Strong

New Home Sales Fall in August, But Year-Over-Year Growth Persists

New residential home sales in the U.S. declined in August 2024, coming in below both the previous month’s figures and market expectations. However, despite this monthly dip, year-over-year data reveals a significant rise in activity.

Sales of New Homes Exceed Expectations in August

New single-family home sales in August 2024 came in at a seasonally adjusted annual rate of 716,000 units. This is a 4.7% decrease from the revised July figure of 751,000. However, it exceeded economists’ forecast of 699,000 units, suggesting demand remains robust despite the monthly drop. Additionally, August 2024 sales showed a significant 9.8% increase compared to August 2023’s 652,000 units, highlighting continued year-over-year growth.

Home Prices Show Mixed Trends

The data also revealed mixed signals in home prices. The median sales price for new homes in August was $420,600. While this figure suggests the majority of home sales were occurring at relatively high price points, the average sales price jumped significantly higher, reaching $492,700. The gap between median and average prices highlights that a portion of the market consists of high-end sales, skewing the average price upward.

Inventory and Supply

At the end of August 2024, there were approximately 467,000 new homes on the market, representing a 7.8-month supply at the current sales pace. This indicates a relatively balanced market in terms of supply and demand, as a six-month supply is generally considered healthy. However, with sales slowing from the prior month, it suggests a potential buildup of inventory that could pressure future pricing if demand doesn’t rebound.

Market Forecast: Slightly Bearish Outlook

Given the month-over-month decline and higher-than-expected inventory levels, the outlook for the new home sales market leans bearish in the short term. The 4.7% drop from July, coupled with the rising inventory, suggests some cooling off in demand, which could impact pricing and sales volume in the coming months. However, the solid year-over-year growth hints that the market’s longer-term trend remains positive.