Sales of newly built homes pulled back in August after surging the prior month, though the broader trend showed solid momentum in the market for single-family houses.
Purchases of new, single-family homes declined 7.6% in August from the prior month to a seasonally adjusted annual rate of 609,000, the Commerce Department said Monday. It was the largest one-month drop since September 2015. Economists surveyed by The Wall Street Journal had expected sales would fall 8.0% to a 602,000 pace in August.
July sales were revised up to a 659,000 rate from an earlier estimate of 654,000, a jump of 13.8% from June to the strongest monthly sales pace since October 2007.
More broadly, through the first eight months of 2016, new-home sales were up 13.3% compared with the same period in 2015.
“The data are highly volatile, and, through the volatility, the trend still looks upward,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics, in a note to clients. New-home sales account for a fairly small slice of U.S. homebuying activity, and short-term fluctuations can obscure the underlying trends. August’s 7.6% fall in sales from the prior month came with a margin of error of 10.7 percentage points, and July’s 13.8% gain had an error margin of 12.7 percentage points.
The U.S. housing market has appeared to slow in recent months, despite continued low borrowing costs. The average interest rate on a 30-year fixed-rate mortgage in August was 3.44%, unchanged from July and down from 3.57% in June, according to Freddie Mac.
Sales of previously owned homes slipped in August for the second straight month, squeezed by tight inventory and high prices. Existing-home sales were up just 0.8% last month compared with a year earlier, according to the National Association of Realtors.
Also, residential building permits and housing starts both fell in August from the prior month, according to Commerce Department data. Weakness in the multifamily sector has disguised strength this year in single-family home construction.
“The bottom line is that demand for new homes is robust and the supply is not adequately keeping up, which has been a primary theme in the housing sector for quite a while now,” Amherst Pierpont Securities chief economist Stephen Stanley said in a note to clients. News Corp, owner of The Wall Street Journal, also operates Realtor.com under license from the National Association of Realtors.
Monday’s report showed there was a 4.6-month supply of newly built homes available at the end of August, given the current sales pace. The median price of new homes sold in August was $284,000, down 5.4% compared with a year earlier.