New single family residential (SFR) home sales of 629,000 on seasonally adjusted annualized rate (SAAR) were up 12.7 percent versus a year ago and up 3.5 percent sequentially from July. Year-to-date new home sales (not seasonally adjusted) of 448,000 units were up 6.9 percent compared to the same period a year ago.
There were an estimated 318,000 new homes available for sale at the end of August 2018 equating to 6.1 months inventory on a seasonally adjusted basis. In comparison, existing home inventory for the same was 4.0 months with 1.92 million active listings. On an unadjusted basis, August 2018 inventory of unsold new homes was 325,000 in the following state of construction:
20.6 percent not yet started
59.1 percent under construction
20.3 percent completed
New home sales are counted differently than existing home transactions. An existing home sale is tallied when the property actually closes and ownership transfers from the seller to the buyer. New home sales are counted at the time the purchase contract is signed. In some extreme circumstances for a counted new home sale, construction may not have yet commenced and that specific transaction may not close. As a result, new home sales often have material revisions from one month to the next. In August 2018, new homes sold were as follows:
30.0 percent not yet started
34.0 percent under construction
32.0 percent completed
Median new-home price of $320,200 was up 6.7 percent versus the same month a year ago. The average new home price at $388,400 was up 5.5 percent versus a year ago.
The following graph shows new home sales on a SAAR and monthly median prices since January 2007.
Since 2001, the median new home price has averaged 22.8 percent greater than the median existing home price. From 2001 through 2006, new home prices were typically 10.9 percent greater than the corresponding existing home price. Since 2014, new home median prices have averaged 30.9 percent greater than existing homes. New home median price was 10.3 percent, 21.9 percent and 20.9 percent greater than existing home prices for June, July and August 2018, respectively. Since 2001, there has been only one month in which median existing home price exceeded the new home median: June 2005 with existing homes at $229,500 and new homes at $226,100.
New home sales volatility is not systematic across the U.S. The U.S. Census Bureau reports these data on a national and regional basis, delineated as follows:
The next table shows year-over-year changes for the U.S. and the four major geographic regions comparing August 2018 to August 2017. As usual, I invoke the TINSTAANREM axiom — There Is No Such Thing As A National Real Estate Market or a National Economy. The same is true regarding the number of new home sales on a regional basis. Other factors such as job growth, rental rates and comparative price of existing home sales, along with availability come into play.
The next table shows regional home sales as a percentage of national home sales, along with the change from August 2017 to August 2018. Note that more than eight-out-of-every 10 new home sales are either in the South or the West, with more than one-half in the South as of August 2018 (55.6 percent).
New and existing home median prices are shown in the following graph commencing in 2001, prior to the start of the housing bubble. The second graph has the same data commencing 2015.
Fannie Mae’s August 2018 forecast expects a 6.2 percent increase in new single family home sales from 2017 to 2018 and a 4.5 percent gain from 2018 to 2019. The Mortgage Bankers Association July 2018 forecast shows new home sales rising 4.5 percent in 2018 year-over-year and 3.0 percent in 2019.
To read the entire Census Bureau news release on new home sales click https://www.census.gov/construction/nrs/pdf/newressales.pdf