U.S. August New Home Sales - Sharp bounce probably in part erratic but merits attention
August new home sales are sharply higher than expected, with a rise of 20.5% to 800k, the highest level since January 2022. The new home sales series is volatile and often sees substantial revisions, so this gain should be treated cautiously, but it raises the question on whether expectations fir Fed easing had an impact.
The NAHB homebuilders’ survey has remained weak into September, but the Mortgage Bankers Association’s weekly house purchase index has shown signs of picking up in the last two weeks. This provides a tentative hint of Fed easing being supportive, though it is unlikely that expectations for a Fed easing would have had such a sharp impact on August sales.
Details show strong gains in all four regions, though the West is lagging, up by 5.6% on the month and still down yr/yr, by 5.7%, the only region not showing a strong yr/yr gain.
Prices also showed a bounce, the median significantly by 4.7% in the month though yr/yr growth is modest at 1.9% if up from -7.9% in July. The average price surged by 11.7% on the month and is up by 12.3% yr/yr, after a 6.8% July decline.
The very strong August report is likely to prove in part erratic, but the housing market is likely to find some support as the Fed eases. August existing home sales due tomorrow will now be watched more closely. We doubt the series will match the sharp bounce in new home sales.
