US new home sales beat expectations in August

Sales of new US single-family homes rose more than expected in August, according to figures released on Friday by the Commerce Department.

New home sales increased 1.5% from July to a seasonally-adjusted annual rate of 740,000. This was comfortably ahead of consensus expectations for a level of 715,000 and marked a four-month high.

July’s sales level was revised up to 729,000 from 708,000.

Meanwhile, the median price of a new home was $390,900 in August, in line with July.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "New home sales have fallen sharply since their 993k peak in January, following the steep decline in mortgage applications, but sales in recent months have run a bit higher than the mortgage data imply.

"This perhaps indicates that the proportion of cash buyers has risen, as has been the case in the market for existing homes. Looking ahead, the rebound in mortgage applications since July points to scope for sales to rise further, perhaps hitting 800k in September.

"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. 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."