New home sales in the United States rose for the second month in a row in August, though increasing demand is showing signs of slowing down because of high prices.
A Sept. 24 report from the Census Bureau (pdf) showed that sales of new residential houses increased 1.5 percent to a seasonally adjusted annual rate of 740,000 units in August.
Housing inventory edged up in August compared to July. There were 378,000 units available in August, or 6.1 months worth of inventory at the current sales rate, compared to 366,000 in July, or 6.0 months. Inventory was up significantly compared to August 2020, when there were 3.5 months of supply.
“These data suggest that the surge in new home sales during the pandemic has ebbed and inventories of unsold homes have risen to a more normal level in relation to sales,” said Conrad DeQuadros, senior economic advisor at Brean Capital in New York, in remarks to Reuters.
The median sales price for a new residential property in August remained unchanged from July and stood at $390,900. Still, this is an increase of 20 percent from last year, when the median price was $325,500.
Home prices rose sharply during the pandemic, though price growth appears to have eased recently, also in the previously owned home market.
Existing home sales—which include single-family houses, condominiums, and co-ops—fell 2 percent in August, after rising 1.6 percent in June and 2.2 percent in July, according to the National Association of Realtors (NAR).
The median existing home price fell slightly from $359,500 in July to $356,700 in August, though it remained nearly 15 percent higher than a year ago.
The inventory of unsold previously occupied homes dropped 1.5 percent to 1.29 million, or around 2.6 months at the current monthly pace.
“High home prices make for an unbalanced market, but prices would normalize with more supply,” said Lawrence Yun, chief economist for NAR, adding that securing a home remains “a major challenge for many prospective buyers.”
Rising home prices have sidelined prospective buyers, with a recent National Association of Home Builders (NAHB) report showing that the main reason prospective buyers gave for not pulling the trigger on a purchase was the inability to find one within their price range.
Two-thirds of active buyers in the second quarter of 2021 spent three months or more searching for a home but remained empty-handed, according to NAHB.