Sales of new single-family homes jumped last month to an annual rate of 421,000, according to figures released Wednesday from the Census Bureau. That's up sharply from July's disappointing 390,000. The latest numbers show that sales of new homes were up by nearly 8 percent from July to August and nearly 13 percent from August 2012 to August 2013.
Still, sales remain below the sustained high levels recorded during the first half of 2013, when they hovered around the 440,000 to 460,000 range.
There may be reason to think that the housing recovery will decelerate in the months to come.
"I think sales volume is going to soften in the next couple of months, and not just seasonally," says Glenn Kelman, CEO of real estate brokerage Redfin. Rising mortgage rates will likely dampen sales, he says, but a lack of inventory will also affect the market.
He says that he's seen a marked decline in buyers' interest in the homes currently on the market
"Earlier this summer, we saw 10, 12 offers on attractive homes and three to five offers on less attractive homes. Now, there are some homes that don't get a single offer in their first week on the market," Kelman says.
The Census Bureau's numbers aren't the only figures signaling a slowdown in the housing recovery. The July Case-Shiller Home Price Index, released Tuesday, showed that prices did not grow as quickly as expected from June to July.
"Price growth will slow through the rest of 2013 and into 2014, to the low single digits, as higher mortgage rates and higher prices reduce housing affordability somewhat and more inventory comes into the market." wrote economists from PNC in a Tuesday analysis of the latest data.
While mortgage rates could drag down future sales, the rising rates may have in fact boosted August sales. That's because fear of further increasesin earlier in the year may have prompted buyers to move rather than wait. Kelman points out that many people who closed on homes in August jumped into the market in the late spring and early summer, when mortgage rates were just starting to climb. The fear of that climb likely pushed some buyers to speed up their housing search.
While the rebound in sales is encouraging, it also may be smart to take the latest government numbers with a grain of salt. New home sales numbers have a large margin of error – even the 12.6 percent increase in sales from August 2012 to August 2013 is not statistically significant.
It's also important to note that, temporary slowdowns and accelerations aside, the housing recovery likely has a long way to go. Even in the pre-housing-bubble days, 800 to 900,000 new homes were regularly sold each month, roughly double where the rate is now.