August 2017 New Home Sales

Sales of new homes fell in August 2017 according to the Census Bureau.  Transaction volume declined 3.4 percent versus July, falling to 560,000 units on an annualized basis.  Compared to a year earlier, 1.2 percent fewer contracts were signed in the period, declining for a second consecutive time.

Regional data were mostly negative. Sales in the South (the largest region) fell 4.7 percent and contracted 9.2 percent from a year ago; this region’s drop is not surprising given the impact of Hurricane Harvey in the final week of the month.  However, other regions declined as well.  A reduction of 2.6 percent hit the West, and the Northeast fell 2.7 percent.  Volume in the Midwest was unchanged. 

Measures of supply improved during August.  Builders added 10,000 units to their inventories for a total of 284,000 new homes.  At the current pace of sales, this stock of houses would be gone in 6.1 months, increasing from 5.7 months in July. 

Price proxies suffered in the period.  The median-priced home fell to $300,200 or a decline of 6.6 percent; this is the lowest level since February of this year and is just $1,300 more than a year earlier.  An average-priced home set buyers back $368,100 or 0.86 percent less than in July; this is the least expensive average since April of this year.

Slower volume was expected because of the devastating weather along the Gulf Coast.  However, weakness in regions other than the South was a surprise.  Like many other indicators, this year’s strong hurricanes will cause problems with the tally for a while.  This disruption increases the need for added attention to the other regions of the nation during the months and quarters ahead.  Since they were not hit by either of the fierce storms of the late summer, they should have less noise in their data.  Atlas will reserve judgment on the state of this portion of the economy for now but will need to see improvements in the other three segments in the months ahead to feel better about the market for new homes.