US new home sales surprisingly strong in August: govt

The US housing sector became a popular place despite the overall economic downturn caused by the Covid-19 pandemic, as cheap mortgage rates and the disruptions caused by the virus spurred people to shop for homes (AFP/JOE RAEDLE)
·1 min read

Sales of new homes rose faster than analysts expected last month in the United States, according to government data released Friday, though prices remained high and supply was still tight.

The Commerce Department reported sales rose 1.5 percent from July's upwardly revised rate to a seasonally adjusted pace of 740,000, annualized, its second consecutive monthly increase.

The housing sector has been a popular place despite the overall economic downturn caused by the Covid-19 pandemic, as cheap mortgage rates and the disruptions caused by the virus spurred people to shop for homes.

Ian Shepherdson of Pantheon Macroeconomics said the two months of gains indicate the fast-spreading Delta variant of the virus could again be pushing people into the market.

"We think the upturn in mortgage demand has been triggered by the Delta Covid wave, in an echo of the surge in demand for suburban homes following the initial Covid shock," he wrote in an analysis.

"The increase in demand this time will be much smaller, and we expect it to flatten again later in the fall as Delta fear recedes."

The trend over the past year and a half caused a tightening of supply and concurrent increase in prices, which the data said improved little last month.

Supply in August was at a seasonally adjusted 6.1-month pace at the current rate of sales, a notch higher than in July. Median home prices remained unchanged from that month at $390,900, but well above the $325,500 median in August 2020.

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