A report released by the Commerce Department on Friday showed an unexpected increase in U.S. new home sales in the month of August.
The Commerce Department said new home sales jumped by 1.5 percent to an annual rate of 740,000 in August after spiking by 6.4 percent to an upwardly revised rate of 729,000 in July.
The continued advance surprised economists, who had expected new home sales to slump by 1.1 percent to a rate of 700,000 from the 708,000 originally reported for the previous month.
With the unexpected increase, new home sales continued to recover after tumbling to their lowest level in over a year in June.
New home sales in the Northeast soared by 26.1 percent to a rate of 29,000, while new home sales in the South surged up by 6.0 percent to a rate of 445,000.
While the report said new home sales in the West also climbed by 1.4 percent to a rate of 215,000, new home sales in the Midwest plunged by 31.1 percent to a rate of 51,000.
"Despite the uptick in August, we expect new home sales to move mostly sideways over the rest of 2021, as strong demand and low mortgage rates are tempered by high prices and construction backlogs," said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.
The Commerce Department also said the median sales price of new houses sold in August was $390,900, unchanged from July but up 20.1 percent from $325,500 in August of 2020.
The estimate of new houses for sale at the end of August was 378,000 compared to 366,000 at the end of July and 286,000 a year ago.
The housing inventory at the end of August represents 6.1 months of supply at the current sales rate, up from 6.0 months in July and up from 3.5 months in August of 2020.
"The inventory of homes for sale increased in August to the largest volume since October 2008, though a record share of for-sale inventory is of homes where construction hasn't yet started," Vanden Houten said.
She added, "The need to work through these backlogs should support new home construction in the months ahead even if the pace of sales moves sideways."
On Wednesday, the National Association of Realtors released a separate report showing a pullback by U.S. existing home sales in the month of August.
NAR said existing home sales slumped by 2.0 percent to an annual rate of 5.88 million in August after jumping by 2.2 percent to a revised rate of 6.00 million in July.
Economists had expected existing home sales to decrease by 1.7 percent to a rate of 5.89 million from the 5.99 million originally reported for the previous month.