- Last time new-home purchases were stronger was February 2008
- Demand climbed in three of four regions, led by Northeast
Purchases of new homes jumped in August to a seven-year high as Americans took advantage of historically low mortgage rates.
Sales climbed 5.7 percent to a 552,000 annualized pace, exceeding all forecasts of economists surveyed by Bloomberg and the highest since February 2008, from a 522,000 rate in July that was stronger than initially reported, a Commerce Department report showed Thursday in Washington.
Steady job gains and cheaper borrowing costs are bolstering demand for new homes, particularly as the supply of previously owned properties is still scant. Further healing in residential real estate should help underpin the U.S. economy amid weakness from the stronger dollar and slower overseas growth.
“Housing has now finally started to participate more strongly” in the expansion, said David Berson, chief economist at Nationwide Insurance in Columbus, Ohio, who projected sales would rise. “It’s quite likely we’ll continue to see the gains going forward.”
The median forecast of 75 economists surveyed by Bloomberg called for 515,000. Estimates ranged from 450,000 to 550,000. July’s reading was previously reported as 507,000.
The median sales price increased 0.3 percent from August 2014 to $292,700, the report showed.
Purchases climbed in three of four U.S. regions, led by a 24.1 percent jump in the Northeast. Demand in the Midwest declined 9.1 percent.
New-home purchases, tabulated when contracts get signed, are considered a timelier barometer of the residential market than purchases of previously owned dwellings. The latter are calculated when a contract closes, typically a month or two later, and account for about 90 percent of the market.
The new-home sales report follows other recent data showing the industry’s progress might be uneven. Existing-home purchases fell 4.8 percent last month to a 5.31 million annual rate from a 5.58 million pace that was the strongest since 2007, according to the National Association of Realtors. While inventories rose from the prior month, they remained 1.7 percent below the August 2014 level.
Housing starts declined 3 percent in August, even as permits to build single-family houses climbed last month to the highest level in seven years, Commerce Department data show.
While home purchases have improved in 2015, Federal Reserve Chair Janet Yellen last week said housing remains “very depressed” considering demographic and employment strength that should be providing more support to the real-estate market.