New-home sales in the US declined in August as median prices at the national level decreased sequentially, as revealed by government data released on Wednesday. This drop comes as a part of ongoing market trends influenced by demand fluctuations and economic shifts. Single-family home sales fell 4.7% on a monthly basis to a seasonally adjusted annual rate of 716,000 units, down from July's revised figures of 751,000, as reported by the Census Bureau and the Department of Housing and Urban Development.
These figures indicate a keen observation point for economists and industry stakeholders alike, as they attempt to gauge the housing market's trajectory. Analysts had predicted sales to come in at the 700,000 level, which would mark a 5.3% decline from the unrevised print. However, on an annual basis, new-home sales have increased by 9.8%, showcasing a mixed but positive long-term outlook.
'After jumping more than 10% in July, new home sales fell less than expected in August and are running ahead of our forecast, which we will revise higher in our October baseline,' remarked Oxford Economics Senior US Economist Nancy Vanden Houten in an email to MT Newswires. 'Lower mortgage rates and a more plentiful supply relative to existing homes should support modest growth in new home sales over the rest of 2024 and in 2025.' The recent decision by the Federal Reserve to lower its benchmark lending rate by 50 basis points, while simultaneously trimming its median federal funds rate outlook from 2024 through 2026, adds another layer of complexity to the housing market dynamics.
This move generally aims to stimulate borrowing and spending, which can indirectly impact new-home sales. Regionally, sales experienced a decline in the Northeast, Midwest, and West, while seeing a modest increase of 2.7% in the South. From August 2023, sales demonstrated notable growth, primarily in the Midwest and South, but exhibited a significant drop of 33% in the Northeast and a 6.7% decrease in the West.
This regional disparity highlights the localized nature of real estate markets across the country. Furthermore, the median price of new houses sold declined to $420,600 last month, down from July's $429,000. 'Plentiful supply and homebuilder incentives have weighed on new home prices, which have trended lower over the last year,' Vanden Houten noted.
'Builders are scaling back their use of price cuts as mortgage rates decline, which should help limit any further declines in new home prices.' New home supply reached 7.8 months at the sales rate in August, rising from a 7.3-month supply in the prior month, yet down 1.3% compared to the same period in 2023.
The seasonally adjusted estimate of new houses for sale at the end of last month saw a sequential growth of 1.7%, and an annual increase of 9.1%, totaling at 467,000 units. In related news, data from the National Association of Realtors indicated that existing home sales decreased by 2.5% on a month-over-month basis in August, exceeding market expectations, while on an annual basis, sales were down 4.2%.
This comprehensive overview of the housing market in the United States illustrates the ongoing adjustments within this pivotal sector and its broader economic implications..