WASHINGTON (9/25/14)--Demand for new single-family homes spiked in August, according to Department of Commerce data, possibly assuaging fears that the housing recovery significantly stalled during the summer.
The seasonally adjusted annualized rate of new-home sales increased by 18% last month to 504,000--the fastest it has grown since May 2008, and the largest one-month increase since January 1992, according to MarketWatch (Sept. 24). The numbers pushed the Commerce Department's 12-month rate of sales in August to 33%.
The reported surge in transactions largely occurred throughout the country, with increases in the West, Northeast and South of 50%, 29% and 8% respectively. The rate of new single-family homes remained steady in the Midwest.
The supply of new homes on the market was up to 203,000 in August--a 1% monthly increase and a 16% year-over-year increase, according to Moody's (Economy.com Sept. 24).
The months-supply of new homes dropped to 4.8 months from 5.6 in July, and was down from 5.5 in August 2013. The median number of months that new homes were on the market remained relatively steady at 3.3, up by 0.1 from August 2013.
Despite the sales increase, the seasonally adjusted median sale price of new homes was down by a monthly rate of 1.6% to $275,000--a 7.9% growth rate on an annual basis. The same figure, unadjusted for seasonal fluctuations, was up by 11.9% on a year-over-year basis.
Home sales above $300,000 as a proportion of total transactions also increased on an annual basis--to 42% from 37% in August 2013.
August's data surprised analysts polled by MarketWatch and Moody's, with a survey taken by the former predicting that the Commerce report would show a seasonally adjusted annualized rate of 426,000 new single-family home sales.
MarketWatch said that the report could build confidence in the housing recovery, but warned that new-home sales data often undergo revisions. It also cautioned that demand strength is precarious, with financial institutions being tight-fisted with credit, and that another government report showed construction on new homes dropped in August.
MarketWatch also reported concerns that post-collapse vacancy rates remain stubbornly high, and Moody's said that the new-home inventory must rise above its historical average of 300,000 to prevent a bubble from forming.
Still, analysts from both firms noted that a recent National Association of Home Builders' survey showed that confidence in the residential construction industry sits at its highest level since 2005.