Sales Down 7.6% Nationwide Following July Boom, But Western US Sees Higher Sales
The latest Commerce Department data shows that in August, new home sales fell 7.6% to a seasonally adjusted annual rate of 609,000 units. Despite the August decline, new home sales are up 20.6% from August 2015, when the seasonally adjusted annual rate of sales was 505,500 units. The AP reports that August’s sales decline follows a 13.8% rise in new home sales in July, indicating some uneven growth in the market. However, BMO Capital Markets Senior Economist Jennifer Lee attributes the overall trend of rising new home sales to increasing homebuilder confidence, slowed price growth, and low interest rates. The AP marks the median new home price at $284,000, down 3.1% from July, and notes that one of the industry’s growing problems is a lack of available housing units for sale.
Reuters notes that July’s sales pace represented the highest level of annualized sales since October 2007. Meanwhile, a housing report “last week showed a solid increase in permits for single-family dwellings as the housing market continues to strengthen overall amid a tightening labor market that is pushing up wages.” However, there is regional variation still on display in the housing market. In August, new home sales declined 34.3% in the Northeast region, 12.3% in the South, and 2.4% in the Midwest. Sales were up 8% in the West, bucking the overall national decline.
What This Means For Small Businesses
Businesses large and small look to a robust housing market as a signal of overall economic health. Indications that a trend of rising home sales may be stalling is worrisome, as it suggests continued weakness in the housing sector. This is not the picture of economic health small business owners need to feel confident in expansion.
The Wall Street Journal also covers August new home sales data.
Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.