New single-family home sales slipped in August, dropping slightly from the two-year high reported in July, according to data released by the Commerce Department today. Prices, meanwhile, rose to the highest level seen in more than five years.
Sales declined 0.3% for a seasonally adjusted annual rate of 373,000 units. However, the new-home sales number has been revised up from the initial estimate in nine of the last 10 months, making it likely that August’s number will eventually be adjusted upward. In today’s report, July’s estimate was revised up to 374,000, from 372,000.
The average sales price among new homes rose to $295,300 in August, the highest level since July 2008. The median price rose to $256,900, the third highest reading on record.
The report comes on the heels of a study from IBM Smarter Commerce, released Tuesday, which found that home-improvement purchases outpaced back-to-school spending among families this summer. Based on shopping trends from more than 500 major retailers, sales of home-related items were up 30% in July and 25.5% higher in August, compared to year-ago levels.
The Home Depot showed similar evidence in its most recent quarterly earnings report. Released last month, the company’s $1.5 billion earnings were the highest seen in five years.
That trend may mean trouble for new-home sales, according to Jay Henderson, global strategy program director at IBM, who believes it indicates a preference for staying put. "People are choosing not to move into a new house and instead [are reinvesting] in their homes," he told USA Today. (By press time, Henderson had not responded to Builder’s request for comment.)
Reinvestment in existing homes may also help explain the jump in existing-home prices seen in August. Average and median prices among existing-home sales were up 7.5% and 10.2% compared to the previous year, a trend that will empower new-home sales both by cutting down on foreclosures as homeowners have less incentive to walk away from underwater mortgages; and by allowing existing-home owners the freedom to move as values improve enough to make selling an existing home feasible.
Claire Easley is a senior editor at Builder. Senior editor John Caulfield contributed reporting to this article.