Sales of new U.S. homes soared in August to the highest level since 2008, according to the Commerce Department’s early estimate, signaling a boom in consumer demand that could lift the housing market.
New home sales rose 18 percent in August, from July’s revised sales figures, to a seasonally adjusted 504,000, the government said Wednesday, the biggest one-month increase since 1992 and the highest level since May 2008 when the economy was in recession. Economists had expected August sales to rise by only 3.4 percent from July.
July’s sales were stronger than initially reported, revised to 427,000 homes from 412,000. Sales have been revised up by 16,000 over the past three months. August’s sales rose 33 percent from August of last year.
The sales are “an incredible gain, even given last month’s inventory expansion,” said Patrick Newport, U.S. economist for IHS Global Insight.
The housing market is experiencing a bottleneck in new home sales because loans to real estate developers only broke a 20-quarter streak of year-on-year declines in dollar value in the second quarter of this year. New home sales account for 10 percent of the housing market, with existing homes making up the rest. Sales of existing homes gained four months in a row then slipped in August.
The median price of new homes sold last month was $275,600, up 8 percent from August of last year, and the average price in August, $347,900, was up 11.9 percent from last year to an all-time high.
If demand for new homes continues to rise, other industries like construction and retail furniture and appliance sales will need to ramp up production and inventories, which would create more jobs and lift the overall economy.