Sales of newly constructed single-family homes surged unexpectedly in August, blowing past economist expectations and hitting their highest level since January 2022 as homebuilders pulled out the stops to move inventory. 

The seasonally adjusted pace of new-home sales jumped 20.5% from July’s upwardly revised annual rate of 664,000 homes to 800,000, according to the Commerce Department. The increase, which represented a 15.4% gain from August 2024, blew past the consensus estimate of 653,000. 

“Lower mortgage rates, along with builder incentives and discounts, helped unlock demand in August,” First American Deputy Chief Economist Odeta Kushi said, noting that 39% of builders cut prices in September, the highest level since COVID. “Demand is there, but it’s taking incentives to coax hesitant buyers off the sidelines. Whether this momentum can be sustained remains to be seen.” 

At the same time, the supply of new homes for sale plunged 17.8% from nine months in July and 9.8% from 8.2 months in August 2024 to 7.4 months at the current sales pace. 

The median sales price of new homes sold in August was $413,500, up 4.7% from $395,100 in July and 1.9% above August 2024. 

Regionally, new-home sales ballooned 72.2% month over month in the Northeast and rose by more modest amounts in the South (24.7%), Midwest (12.7%) and West (5.6%).  

While the builder incentives are good news for those in the market for a home, the same can’t be said for those on the other side of the transaction, said Lisa Harris, an agent with RE/MAX Center in Atlanta.

“These builder incentives are great for buyers, but have been a huge challenge for traditional sellers who are stuck in the old ‘seller’s market’ mentality,” she said. “Many traditional sellers are still digging in their heels, so we’re seeing longer days on market and more expired listings in metro Atlanta. In today’s market, flexibility is the real currency.”