Sales of new single-family homes exceeded 1 million in August 2020, marking the highest level since September 2006. The metric, which has been rising for four consecutive months, exceeded analysts’ expectation by 13.6%.
The U.S. housing market has shown a resilient performance over the past few months despite ambivalent market predictions and fears of a second wave of the virus. Not only did the industry offset these COVID-19-related headwinds but also tackled lumber price swings, mortgage delinquencies, U.S.-China trade spat, labor shortage and inflating land prices.
This industry has experienced a strong V-shaped recovery since May and its growth is now exceeding pre-pandemic levels fueled by the work-from-home initiative and record low mortgage rates.
Since May, the Zacks Building Products – Home Builders industry has improved 57.1% compared with the Zacks Construction sector and S&P 500 composite’s 35% and 14.6% rally, respectively.
Inside the Numbers
August new home sales increased 4.8% to a seasonally adjusted annual rate of 1,011,000 from an upwardly-revised July rate of 965,000 units. Also, the sales pace was 43.2% higher than the year-ago period.
Regionally, the metric rose in Northeast and South (accounting for bulk of transactions) by 5% and 13.4%, respectively. Sales in the Midwest and West, however, dropped 21.4% and 1.7%, respectively, in August. Nonetheless, sales in all the four regions increased in double digits from the August 2019 level.
Median sales price in August was $312,800, which fell 4.6% month over month and 4.3% from the year-ago level. Average sales price of $369,000 also declined 0.8% from the prior month and 6% from August 2019.
August housing inventory decreased 3.1% from July and 13.2% from the year-ago period to 282,000. It would take just 3.3 months to deplete the current supply of homes, down from 3.6 months in July and 5.5 months in