Sales of new homes dropped 3.4 percent in August and the amount of new home supply is the highest since 2009, according to the National Association of Federally Insured Credit Union’s (NAFCU) analysis of Census Bureau data.
August marked the second straight month that new home sales have dropped. New home sales are now at their lowest level since last December. Over the previous 12 months, new home sales are down 1.2 percent.
Further, there were 6.1 months of supply in August, up from 5.7 months in July. The number of unsold homes left on the market rose from 274,000 to 284,000 units. This is 17.8 percent higher than a year ago and represents the largest number of new homes for sale since 2009. The inventory-to-sales ratio is at its highest level since July 2014, NAFCU said.
However, overall demand for housing remains strong, particularly the existing-home market, NAFCU Research Assistant Yun Cohen said.
“Excess demand will likely spill over from the existing-home market if the price premium for new homes continues to fall,” Cohen said in a NAFCU Macro Data Flash report Tuesday.
Sales declined in three of the four regions in August. Sales in the South decreased 4.7 percent, followed by the West (-2.7 percent) and the Northeast (-2.6 percent). Sales in the Midwest were essentially unchanged from last month.
“Hurricanes Harvey and Irma will likely slow sales in the South for the next few months,” Cohen said. “Some new construction may also be delayed as a result. According to the National Association of Home Builders, builder confidence for new single-family homes fell in September amid concerns that the hurricanes could exacerbate labor shortages and rising material costs.”
Also, the median new-home price decreased from $319,900 in July to $300,200 in August. August’s prices were 0.4 percent higher than a year ago.