The data tracking sales of new homes is often volatile and economists had expected a sharp reversal from the near 9-year high notched in July, but August’s numbers beat the median forecast of a 600,000 rate from economists surveyed by MarketWatch.
An upward revision to July’s number, previously reported as 654,000, took that to 659,000, marking the highest since late 2007. That gain was mostly offset by a downward revision to June figures, however.
There were 4.6 months’ worth of homes available at the current pace of sales in August. The median sales price in August was $284,000, continuing a downward trend. That was the lowest since September 2014 and 5.4% below year-ago levels.
That’s a welcome shift for a market starved for inventory at lower prices. As Richard Moody, chief economist for Regions Financial, wrote on Monday morning, “For some time now home sales have been atypically skewed towards the higher end of the price scale, which simply reflected how supply constrained builders were responding to underlying demand and credit conditions. We have, however, questioned how long this would continue, and we may have our answer.”
In August, Moody noted, homes priced at $300,000 or above made up 44% of all sales, the lowest since February 2014. The shift could reflect builders recognizing how much demand exists for entry level homes, he wrote.
Another way to quantify the downward shift in prices is to look at the price segment that includes the median, homes priced from $200,000 to $299,999. That’s also where the median price of previously-owned homes sits. In August, the median existing-home cost $242,200, the National Association of Realtors said last week.
The share of homes sold in this price range jumped 5 percentage points to 37%, Wells Fargo economists wrote in a note Monday. “We suspect that there has been some softening of demand at higher price points in markets being most adversely impacted by higher oil prices, such as Houston,” the analysts wrote.
That gives lower-price-point buyers, particularly first-timers, a toehold in the market, they noted.
Many economists have wanted to see a stronger pace of building to satisfy strong demand for housing. Home builder sentiment matched a cycle high in September, according to an industry report out last week.
But with the monthly choppiness smoothed out, the new homes data show a clear upward trend: sales for the year to date are 13.3% higher than they were over the same period a year ago.