In what is shaping up as one of the brightest spots in the pandemic-ravaged economy, sales of new homes rose 4.8% in August to a seasonally adjusted 1.011 million units.
Meanwhile, July’s sales were revised upward to 965,000 units from the previously reported rate of 901,000, according to the Census Bureau.
The torrid pace has not been matched since September 2006, just as the housing bubble was exploding, leading to the Great Recession. That was driven by a fury of sub-standard lending on the part of the nation’s largest banks.
This time, experts say the market is largely being driven by two factors: a shortage of available housing inventory and extremely low interest rates. The bureau said there is slightly more than 3 months average supply of new homes for sale.
“Already, more new homes have sold in 2020 than did in all of 2019,” Danielle Hale, chief economist at Realtor.com, told Marketwatch.com. “With the number of existing homes for sale down consistently and considerably from a year ago, new homes are an important segment of opportunity for home shoppers.”
Surprisingly, the strong demand is occurring during a period of high joblessness, caused by business shutdowns and interruptions amid the COVID-19 pandemic.
The sales surge is driving prices up, with the median price of a new home sold in August $312,800. The average sales price was $369,000.
While the overall pace of sales was 4.8% higher than July, there were geographic differences with the South showing the strongest gain at 13.4%.