August New Home Sales Reach Greatest Highs Since 2006

In the midst of 2020’s many uncertainties, one thing is holding steady: the housing market. 


In August, new single-family home sales exceeded an annual rate of 1 million for the first time since 2006, per the U.S. Census Bureau. This is a 4.8% increase from the upwardly-revised pace of 965,000 homes in July and a 43% increase over last year.


While national figures are high, not all regions of the country saw the same increase in sales. The South experienced the biggest increase of 13.4%, followed by a jump of 5% in the Northeast. In contrast, new home sales dropped by 21.4% in the Midwest and 1.7% in the West.


According to research compiled by the California Association of Realtors® (CAR), existing, single-family home sales in the state grew by 6.3% in August on a seasonally adjusted annualized rate, up 14.6% from the same month in 2019.


A 6-month supply of new homes is considered ideal for a healthy market. However in the wake of current demand, July reported a 4-month supply, and inventory dropped to just 282,000 units in August — a 3.3-month supply if current demand holds steady. 


How long might it take to catch up new home inventory? A recent Census Bureau report states that in 2019, single-family homes took just over eight months to build, including authorization to start and actual construction. That number has been trending upward since 2014. The report shows that houses built for sale took about seven months to complete, while custom builds generally took approximately 13.5 months.


The demand for new homes has increased, in part, due to tight inventory in the resale home sector. Sellers remain reluctant to list their properties due to concerns about the pandemic. reports that compared with a year ago, nearly 400,000 fewer homes have been listed for sale. 


According to Danielle Hale, chief economist at, “Already, more new homes have sold in 2020 than did in all of 2019. With the number of existing homes for sale down consistently and considerably from a year ago, new homes are an important segment of opportunity for home shoppers.”


Meanwhile, mortgage rates are at record lows. Mortgage application data from the Mortgage Bankers Association demonstrates that this trend is driving buyer demand. But new homebuyers are facing challenges around bigger down payments and higher credit scores, as lending standards have tightened since the pandemic. Lenders are cautious about ensuring that borrowers can make their mortgage payments as layoffs and business closures continue. 


Concurrently, short inventories are driving home prices upward. Many families seeking to take advantage of the historically low interest rates may find that they are priced out of the market. Cash is still king as buyers with green are winning properties by offering more than the seller’s asking price. 


In California, home prices are at an all-time median record, after spikes in June and July.


CAR Senior Vice President and Chief Economist Leslie Appleton-Young said, “Low rates and tight housing inventory are contributing factors to the statewide median price setting a new record high three months in a row from June to August. A change in the mix of sales is another variable that keeps pushing median prices higher, as sales growth of higher-priced properties continued to outpace their more affordable counterparts.”


Some say the combination of factors could cause the home market to level off. Freddie Mac Chief Economist Sam Khater observed, “Mortgage rates set several record lows over the last few months and have remained low into September. While there is room for rates to decrease even more, higher home prices and low inventory could potentially stifle the high demand that we’ve been seeing.”


QuickDraw Fund Control wanted to share these important trends with you to consider for your current and future projects. Please feel free to contact us with any questions.

October 2, 2020
QuickDraw Fund Control