The headline from the Commerce Department report on new home sales this morning was that August delivered a 7.9% increase over July. The Commerce Department numbers for August surprised analysts just like the existing home sales data last week because it seems that many folks have bought into the idea that rising interest rates are choking off the nascent housing recovery.

Once again I stand by the opinion that no conclusive data exist that show we are seeing sales decline. The only declines we are seeing consistently are typical seasonal declines in activity.

Our more detailed insights into new home community sales and traffic support that opinion. Traffic across new subdivisions continued to stay above levels seen over the same season in the prior year, according to the Metrostudy traffic and contract survey covering new subdivisions.

In fact, average traffic across subdivisions reached its highest level in 18 months for the week ending August 18, 2013, surpassing both of the active spring seasons during that period. The most recent September data showed a year-over-year increase in activity for both contracts and traffic, with average contracts up 12% over the same week in 2012 and average traffic up by 10%.

Although contracts have shown more volatility over recent months, the latest jump suggests the strong traffic surge seen in August is generating conversions and has potential to drive sales momentum over coming weeks.
At the local market level, where real trends are much more evident, we are seeing some areas show increases in traffic and sales even though we are now out of the prime selling season.

The average monthly traffic growth across market areas for August 2013 was led by Calvert, MD with a 150% increase over the prior month average, followed by Lake, IN at 83%. The West was represented in the top growth markets by areas in California and Arizona. Three of these states made appearances in year over year growth, as well, although across different markets. Pinal County, AZ topped the rankings here with 712% growth over August 2012, and Arizona also took the second position with Southeast Valley increasing 320% over last year. DuPage, IL appeared third, as Orange, CA and Charles, MD completed the top five.

Moving to contract growth across market areas, Kendall, IL held the top spot here with a 119% increase in average contracts over July. Illinois held second place, as well, with a 113% increase in Will, IL while Maryland and Colorado took the remaining positions for growth leaders. Looking at average contract growth for year over year, Charles, MD led with a 762% increase over 2012 followed by a 245% jump for Coachella Valley, CA. Rounding out the list were repeat appearances by markets across Arizona, Maryland and Illinois.


We must conclude that the housing recovery is alive and well. Consumers show continued interest in buying and that is evidenced by survey data, traffic data, and sales data. When you adjust for seasonality, demand remains strong despite higher mortgage rates compared to the early spring. Life drives demand for housing, not the Fed.

Learn more about markets featured in this article: Phoenix, AZ, Los Angeles, CA.