Sales of new
single-family houses in August 2021 were at a seasonally adjusted annual rate (SAAR)
of 740,000 units (708,000 expected).
This is 1.5% (±15.1%)* above the revised July rate of 729,000 (originally 708,000
units), but 24.3% (±19.1%) below the August 2020 estimate of 977,000 units; the
not-seasonally adjusted (NSA) year-over-year comparison (shown in the table
above) was -23.5%. For longer-term perspectives, NSA sales were 46.7% below the
“housing bubble” peak but 18.6% above the long-term, pre-2000 average.
The
median sales price of new houses sold in August was unchanged at a record-high $390,900;
meanwhile, the average sales price edged down to $443,200 ($5,500 or -1.2% MoM).
Starter homes (defined here as those priced below $200,000) comprised 2.3% of
the total sold, down from the year-earlier 6.7%; prior to the Great Recession starter
homes represented as much as 61% of total new-home sales. Homes priced below
$150,000 were less than 0.6% of sales, essentially unchanged from a year
earlier.
* 90% confidence interval includes zero. The Census Bureau does not have sufficient statistical evidence to conclude that the actual change is different from zero.
As mentioned in our post about housing permits, starts and completions in August, single-unit completions rose by 26,000 units (+2.8%). Because sales increased by a smaller amount (11,000 units; +1.5%), inventory for sale rose in absolute (+12,000 units) and months-of-inventory (+0.1 month) terms.
Existing home sales retreated in August (120,000 units or +2.0%), to a SAAR of 5.88 million units (5.90 million expected). Inventory of existing homes for sale contracted in absolute terms (20,000 units) but months-of-inventory was unchanged. Because resales shrank while new-home sales rose, the share of total sales comprised of new homes jumped to 11.2%. The median price of previously owned homes sold in August fell to $356,700 ($2,800 or -0.8% MoM).
Housing
affordability rose by 3.9 percentage points as the median price of existing
homes for sale in July edged down by $3,100 (-0.8% MoM; +18.6 YoY), to
$367,000. Concurrently, Standard
& Poor’s reported that the U.S. National Index in the S&P Case-Shiller
CoreLogic Home Price indices rose at a not-seasonally adjusted monthly change
of +1.6% (+19.7% YoY).
“July
2021 is the fourth consecutive month in which the growth rate of housing prices
set a record,” said Craig Lazzara, Managing Director and Global Head of Index
Investment Strategy at S&P DJI. “The National Composite Index marked its
fourteenth consecutive month of accelerating prices with a 19.7% gain from
year-ago levels, up from 18.7% in June and 16.9% in May. This acceleration is
also reflected in the 10- and 20-City Composites (up 19.1% and 19.9%,
respectively). The last several months have been extraordinary not only in the
level of price gains, but in the consistency of gains across the country. In
July, all 20 cities rose, and 17 gained more in the 12 months ended in July
than they had gained in the 12 months ended in June. Home prices in 19 of our
20 cities now stand at all-time highs, with the sole outlier (Chicago) only
0.3% below its 2006 peak. The National Composite, as well as the 10- and
20-City indices, are likewise at their all-time highs.
“July’s
19.7% price gain for the National Composite is the highest reading in more than
30 years of S&P CoreLogic Case-Shiller data. This month, New York joined
Boston, Charlotte, Cleveland, Dallas, Denver, and Seattle in recording their
all-time highest 12-month gains. Price gains in all 20 cities were in the top
quintile of historical performance; in 15 cities, price gains were in the top 5%
of historical performance.
“We
have previously suggested that the strength in the U.S. housing market is being
driven in part by a reaction to the COVID pandemic, as potential buyers move
from urban apartments to suburban homes. July’s data are consistent with this
hypothesis. This demand surge may simply represent an acceleration of purchases
that would have occurred anyway over the next several years. Alternatively,
there may have been a secular change in locational preferences, leading to a
permanent shift in the demand curve for housing. More time and data will be
required to analyze this question.
“Phoenix’s 32.4% increase led all cities for the 26th consecutive month, with San Diego (+27.8%) and Seattle (+25.5%) not far behind. As has been the case for the last several months, prices were strongest in the Southwest (+24.2%) and West (+23.7%), but every region logged double-digit gains and recorded all-time-high rate increases.”
The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.
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