Sales of new single-family homes fell in August after posting strong gains for much of the past year. Sales came in at a seasonally-adjusted annual rate of 609,000, down from 659,000 in July, a drop of 10.7 percent. However, that is 33 percent above the September 2015 rate of 457,000. New home sales have been trending higher since bottoming out in 2010-2011 and are now in the 600,000 to 800,000 range that was typical in economic expansions before the housing bubble of the 2000s.
At the same time, new single-family home construction has been picking up with new home starts coming in at a 722,000 pace in August. Though that pace is well above the recession lows, it is still below the 1,000,000+ pace that occurred in prior expansions.
Overall, single-family sales and starts have been trending higher since the end of the last recession but neither is pointing to a strong housing market. However, the inventory of new homes for sale paints a different picture. The months’ supply of new homes on the market currently comes in at 4.6 months in August, only slightly above the average of about 4 months during the height of the housing boom, lower than the 5 to 7 month supply that was typical in prior expansions and much lower than the peaks of 10 months or more during prior recessions.
Housing markets will always be “local” but on an aggregate level, activity measures continue to trend higher while inventory remains tight.
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