New US home sales came in well above forecasts in August with a 4.8 percent gain, as the housing market continues to recover from the coronavirus downturn, the Commerce Department said on Thursday.
August’s annualized rate of just over one million sales, seasonally adjusted, came after the upwardly revised annual rate of 965,000 sales reported in July and underscores how housing has managed to climb back from the hit taken during the Covid-19 downturn.
The growth was however not spread evenly, with month-on-month sales surging in the South 13.4 percent, and climbing 5.0 percent in the North, but declining slightly in the West and by a massive 21.4 percent in the Midwest.
“Home sales are well supported by solid demand and a favorable interest rate environment,” Rubeela Farooqi of High Frequency Economics said.
While agreeing that the result was “spectacular,” Ian Shepherdson of Pantheon Macroeconomics said the data’s high margin of error could mean sales actually have not grown at all.
He also pointed to the low 3.3-month supply of new housing as potentially pushing prices upwards to as high as 10 percent year-on-year.
“Stepping back from the monthly noise, though, new home sales are one of very few indicators to be enjoying a real V-shaped recovery,” Shepherdson said.
“But we’re not sure how much further it can run, given that mortgage applications appear to be leveling-off, and lending standards are tightening.”