August New Home Sales Down to 7.6% Month-over-Month, Better Than Forecast

Written by Jill Mislinski

This morning's release of the August New Home Sales from the Census Bureau came in at 609K, down 7.6% month-over-month from a revised 659K in July. Seasonally adjusted estimates for May, June, and July were revised. The Investing.com forecast was for 600K.

Here is the opening from the report:

Sales of new single-family houses in August 2016 were at a seasonally adjusted annual rate of 609,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 7.6 percent (±10.7%)* below the revised July rate of 659,000, but is 20.6 percent (±14.8%) above the August 2015 estimate of 505,000.

The median sales price of new houses sold in August 2016 was $284,000; the average sales price was $353,600. The seasonally adjusted estimate of new houses for sale at the end of August was 235,000. This represents a supply of 4.6 months at the current sales rate. [Full Report]

For a longer-term perspective, here is a snapshot of the data series, which is produced in conjunction with the Department of Housing and Urban Development. The data since January 1963 is available in the St. Louis Fed's FRED repository here. We've included a six-month moving average to highlight the trend in this highly volatile series.

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Over this time frame, we see the steady rise in new home sales following the 1990 recession and the acceleration in sales during the real estate bubble that peaked in 2005.

The Population-Adjusted Reality

Now let's examine the data with a simple population adjustment. The Census Bureau's mid-month population estimates show a 72.5% increase in the US population since 1963. Here is a chart of new home sales as a percent of the population.

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New single-family home sales are about 3.0% above the 1963 start of this data series. The population-adjusted version is 40.3% below the first 1963 sales and at a level similar to the lows we saw during the double-dip recession in the early 1980s, a time when 30-year mortgage rates peaked at 18%. Today's 30-year rate is around 3.5%.

For another perspective, here are the median new home sale prices back to 1963, inflation adjusted. The data source is also the Census Bureau and can be found on a press release and website above. For inflation adjustment, we use the CPI-U, which is the Consumer Price Index for All Urban Consumers.

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Here's a zoomed in look since 2000. 

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