Home / Business / New home sales in the United States have increased at the fastest pace since 2006 as the housing market shines with a pandemic

New home sales in the United States have increased at the fastest pace since 2006 as the housing market shines with a pandemic

Model homes and signs for sale line the streets as a housing plan builds in Zelienople, Pa., Wednesday, March 18, 2020. New home sales in the United States fell 4.4% in February with larger declines expected in the coming months due to the major coronavirus fold on home sales. (AP Photo / Keith Srakocic)
  • Sales of new homes in the United States increased 4.8 percent in August, at an annual rate of 1 million units, the Census Bureau reported Thursday.
  • This rate was the highest since 2006 and marked four consecutive months of increased sales.
  • The agency̵
    7;s estimate of new homes for sale dropped to 282,000, reflecting 3.3 months of supply at the current pace of sales. This is the shortest data period dating back to 1963.
  • While the housing market has been one of the few bright spots in the virus-ridden economy, some fear that the decline in supply will soon stop the sector rally.
  • Visit the Business Insider home page for more stories.

The US housing market extended its winning streak in August as Americans continued to benefit from record mortgage rates.

Sales of new homes rose 4.8 percent, at a seasonally adjusted annual rate of 1.01 million units, the Census Bureau announced Thursday. The rate was the highest since 2006 and marked four months of increases. Economists surveyed by Bloomberg had expected the rate to drop to 890,000 units last month.

The median sale price of new homes has fallen from a year ago to $ 312,800. The average selling price was $ 369,000.

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The jump in July was revised upwards, with a gain of 14.7%.

Thursday’s report also revealed growing tension in housing supply. The seasonally adjusted estimate of new homes for sale has fallen to 282,000 from 291,000. The latest reading represented a 3.3-month supply at the current housing market rate of sale, the shortest period in the data dating back to 1963.

The housing market has been one of the few corners of the economy to enjoy a V-shaped rebound through the coronavirus pandemic. The Federal Reserve’s decision in March to push interest rates close to zero lowered mortgage rates and spurred a recovery in home sales. The central bank’s subsequent message that rates would remain low for years added fuel to the market recovery. But some fear the strong rally is in its final stages.

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“While strong demand and lower mortgage rates support home sales, the slow recovery and weak labor market pose downside risks that we expect will weigh on home sales in the months ahead,” said Nancy Vanden Houten, researcher by Oxford Economics.

Other indicators pointed to lasting demand in the sector. Homebuilders’ optimism hit an all-time high in September, according to the National Association of Home Builders / Wells Fargo Housing Market Index. Sales of existing homes also went in line with purchases of new units during the summer.

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