Nationally, new home sales are soaring; Seattle home price growth is among nation’s most vibrant.

While consumer confidence may be sagging, homebuyers remain very active, the U.S. Census Bureau reports.

Sales of new single-family houses in July 2020 were at a seasonally adjusted annual rate of 901,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 13.9 percent (±20.0 percent)* above the revised June rate of 791,000 and is 36.3 percent (±27.4 percent) above the July 2019 estimate of 661,000.

As the chart shows, the sales growth is dramatic.

Calculated Risk comments

New home sales for July were reported at 901,000 on a seasonally adjusted annual rate basis (SAAR). Sales for the previous three months were revised up, combined.

This was well above consensus expectations, and this was the highest sales rate since 2007. Clearly low mortgages rates, and low sales in March and April (due to the pandemic) have led to a bounce back in sales in May, June and July.  Favorable demographics (something I wrote about many times over the last decade) and a surging stock market have probably helped new home sales too.

CR includes this caution:

Important: No one should get too excited.  Many years ago, I wrote several articles about how new home sales and housing starts (especially single family starts) were some of the best leading indicators for the economy.   However, I’ve noted that there are times when this isn’t true.   NOW is one of those times.

Currently the course of the economy will be determined by the course of the virus, and New Home Sales tell us nothing about the future of the pandemic.  Without the pandemic, I’d be very positive about this report.

Yes. In Seattle, housing prices are soaring, writes Seattle Times business reporter  Katherine Khashimova Long. 

For the fifth month in a row, home prices around Seattle rose faster in June — 6.5%, year-over-year — than any of the nation’s other top 18 metro areas, save Phoenix, according to new data from S&P CoreLogic Case-Shiller Home Price Index. That’s more or less the same rate of growth we’ve seen since spring.

Price growth in King, Pierce and Snohomish counties topped national averages for the eighth month straight. National year-over-year home price growth of 4.3% in June pointed to a “stable” market, said S&P Managing Director Craig Lazzara in a statement. Prices rose in each of the 19 large cities that Case-Shiller tracks; among just those metros, year-over-year price growth averaged 3.5%.

The higher sales prices no doubt played a role in the better-than-expected state revenue collections reported by the Economic and Revenue Forecast Council. From the August collections report:

July DOR non-Revenue Act collections came in $33.4 million (10.5%) higher than forecasted. Cumulatively, collections are now $46.9 million (5.7%) higher than forecasted.

This month’s surplus was once again due to real estate excise tax (REET) collections, which came in $36.0 million (59.3%) higher than forecasted. Seasonally adjusted sales increased sharply for another month (see figure), while the forecast had sales growing more slowly from their levels of April and May. Sales of large commercial property (property valued at $10 million or more) totaled $638 million, up from last month’s total of $195 million. Cumulatively, REET collections are now $60.4 million (52.5%) higher than forecasted.

Again, sustainability remains a concern. But it’s good while it lasts.