Sales of new single-family homes rose nearly 8 percent in August and are 12.6 percent higher than a year ago, according to new data released Wednesday by the Census Bureau.
The rise — which comes just a month after new home sales plunged by more than 14 percent— is the latest turn in what economists say will be a volatile ride for this segment of the housing market.
The number of new homes sold in August was at a seasonally adjusted annual rate of 421,000, up from the revised rate of 390,000 homes in July. That figure is still below the rate of construction needed in a healthy market, according to analysts. Right now, it would take five months to run through the supply of new homes, according to the report. A six-month supply of homes is considered healthy, and the housing market is still facing a shortage of inventory.
Apart from low inventory, rising mortgage rates have started to affect most aspects of the housing recovery. Rates still remain at record lows, with the 30-year fixed rate average at 4.5 percent. But they have jumped by more than a percentage point in the last four months, pricing some buyers out of the market.
But the housing recovery is still on solid footing, analysts say. Home prices continue to rise across the nation and more properties are moving out of foreclosure.
On a monthly basis, August sales of new homes were up more than 15 percent in the South, which includes the Washington region. They were up 8.8 percent in the Northeast, nearly 20 percent in the Midwest and fell more than 14 percent in the West. The median price of new homes sold was $254,600.