Record Prices Are Not Slowing New-Home Sales

U.S. sales of new homes rose 1.5% during August compared with July to an annual rate of 740,000, according to the U.S. Census Bureau. 

The median sales price of new houses sold in August was $390,900, matching July’s figure, which was a record high. The supply of new homes for sale increased between July and August, equating to a 6.1-month supply of homes.

The Bureau figures count sales when a contract is signed unlike the National Association of Realtors which captures data for sales that have closed. The bureau figures can be volatile and subject to significant revisions due to the report’s small sample size.

Whether new home sales can keep this steady pace will depend upon how willing buyers are to stomach rising prices—especially given expectations that mortgage rates are set to increase given the Federal Reserve’s shifting policies.

“Buyers show signs of having moved past a ‘land-a-home-at-all-costs’ mentality as rising home prices mean purchasing a home—whether new or existing—requires a larger share of the typical American’s paycheck,” said Danielle Hale, the chief economist at Realtor.com. “Consumers were recalibrating priorities this summer, balancing the resumption of travel, vacations and dining out with big ticket budget items like home-buying or renting—and doing so in the face of rising costs on just about everything.”

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