Summary
- Sales of new single-family homes bounced higher in August, jumping 28.8 percent to 685,000 at a seasonally-adjusted annual rate from a 532,000 pace in July.
- The surprising result is unlikely to be sustained in the coming months.
- The total inventory of new single-family homes for sale rose 0.4 percent to 461,000 in August, the highest since March 2008.
By Robert Hughes
However, the surprising result is unlikely to be sustained in the coming months. The National Association of Home Builders’ Housing Market Index, a measure of homebuilder sentiment, fell again in September, coming in at 46 versus 49 in August. That is the ninth drop and the second month below the neutral 50 threshold. The index is down sharply from recent highs of 84 in December 2021 and 90 in November 2020.
According to the report, “In another sign that the slowdown in the housing market continues, builder sentiment fell for the ninth straight month in September as the combination of elevated interest rates, persistent building material supply chain disruptions and high home prices continue to take a toll on affordability.” The report adds, “In another indicator of a weakening market, 24% of builders reported reducing home prices, up from 19% last month. Builder sentiment has declined every month in 2022. Due to tightening monetary policy, mortgage rates increased above 6% last week, the highest level since 2008, which is pricing buyers out of the market. In this soft market, more than half of the builders in our survey reported using incentives to bolster sales, including mortgage rate buydowns, free amenities and price reductions.”
All three components of the Housing Market Index fell again in August. The expected single-family sales index dropped to 46 from 47 in the prior month, the current single-family sales index was down to 54 from 57 in August, and the traffic of prospective buyers index sank again, hitting 31 from 32 in the prior month.
In August, sales of new single-family homes were up in all four regions. Sales in the Northeast, the smallest region by volume, rose 66.7 percent, sales in the South, the largest by volume, rose 29.4 percent, sales in the West increased 27.5 percent, and sales in the Midwest rose 16.7 percent for the month. Over the last 12 months, sales were down in two of the four regions, led by a 24.0 percent fall in the West while sales were off by 21.9 percent in the Northeast. Gains from a year ago were seen in the South (10.4 percent) and in the Midwest (5.0 percent).
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.
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New Single-Family Home Sales Jump In August, But Headwinds Intensify