Sales of newly built homes surged to their highest level since 2006 in August.
The Census Bureau reported Thursday that sales of new single-family homes hit a seasonally adjusted, annualized rate of 1.011 million. This was well above expectations for 875,000 and the first-time sales exceeded one million since 2006.
Compared with last year, new home sales are up 43 percent. Compared with a month earlier, sales were up 4.8 percent.
Sales of new homes have exceeded expectations for four months running. The August sales number exceeded the top of the range of estimates by economists polled by Econday.
The previous three months were revised up significantly.
The three-month moving average, which many economists consider a more reliable indicator of the health of the housing market because it smooths out month-to-month volatility, climbed to 939,000.
Although new home sales account for only 11.5 percent of total housing market sales, they have bigger spill-over effects on the economy. Homebuilding increases demand for labor and new homes need to outfitted with furniture and appliances. Sales of existing homes also hit a 14 year high in August.
A broad range of factors—from very low interest rates to looting and rioting—has pressed Americans to speed up purchasing plans and pushed renters to decide to become home buyers. Mortgage rates, however, rose in August but this did not deter buyers.
Many city-dwellers now see suburban life more attractive because so many cities have shutdown restaurants, bars, theaters, museums, and other cultural and commercial amenities that made urban life desirable. Parents are also seeking out school districts where schools are open for in-person learning rather than continue the ineffective remote learning.
The stay-at-home orders also highlighted the confining features of apartment life. A house with a yard and more square feet is all the more valuable for families forced out of public spaces. What’s more, the riots, looting, a rise in shootings, and anti-police protests have brought renewed attention to crime and other dangers of city life.
Working from home is likely also causing many buyers to consider living outside of cities. Suburban homes have more room for home offices and commuting is less of an inconvenience when workers are going into office less frequently or staying home most of the time.
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