Builders just had their best month in 3 years: new-home sales rocket 20% in August

New homes flew off the shelf in August. Sales jumped 20.5% from July to an 800,000 annual pace — the fastest since January 2022 and the biggest one-month pop since August 2022, per the US Census. They were also 15.4% above August 2024.

And here’s the twist: buyers were signing contracts while 30-year mortgage rates hovered around ~6.6% — higher than where they drifted later in September.

Incentives, incentives, incentives. Builders turned on the jets — rate buydowns, upgrades, and price cuts. In September, 39% of builders reported cutting prices (up from 37% in August), the highest share since the pandemic era.

Sticker math: Despite the deal-making, the median new-home price rose 1.9% year over year to $413,500, helped by more high-end sales (including $1M+).

The Census series is volatile and comes with a wide margin of error. NAHB’s Robert Dietz:

“We were expecting a gain but not that large.”

Analyst Ivy Zelman called the jump “directionally right” but “too high” in magnitude; her broader builder survey showed about a 6% YoY rise.

Census itself says there’s 90% confidence the monthly change ranged from roughly –1.3% to +42.3%. Translation: expect revisions.

Supply, regions, and rates

• Inventory tightened: Months’ supply fell to 7.4 from 9.0 in July; the stock of new homes slipped to ~490,000, the lowest this year.
• Where it hit: Big gains in the South (the busiest building region) and Northeast (small base = bigger swings). The West improved but lagged — prices there bite the hardest.
• Rates backdrop: August’s rate steadied near 6.63%. The bigger slide came in September toward the low-6s, after the Fed’s rate cut — so any rate tailwind likely shows up more in September/October sales.

Lower mortgage rates could keep demand warm — but if borrowing gets cheaper, builders may dial back incentives, partly offsetting the benefit. Starts and permits slowed in August, suggesting builders had been bracing for softer demand even as sales surprised.

Bottom line: August was a breakout month for builders — thanks largely to aggressive sweeteners and a still-tight existing-home market. Enjoy the headline, but watch the revisions and September data to see how much of this surge sticks.

With input from Bloomberg, CNBC, and Reuters.