Sales of new single-family homes are down 4.7 percent to 716,000 in August after an upward revision to 751,000 in July. Sales are up 9.8 percent compared to a year ago. The August level is above the consensus of 700,000 in the Econoday survey of forecasters. The decrease in sales likely reflects constraint on the part of potential homebuyers as they anticipate lower mortgage rates and more inventory in the existing home market. The Freddie Mac rate for a 30-year fixed rate mortgage was at 6.73 percent in the week ending August 1 and had fallen to 6.35 percent by the week ending August 29 with every sign that the FOMC would lower the fed funds target rate at the September 17-18 meeting and which would mean further declines in mortgage rates.

The median price of a single-family home is down 2.0 percent to $420,600 in August from $429,000 in July, and down 4.6 percent from August 2023. Some of the decline is a shift to building small units to meet demand, but homebuilders are offering discounts and incentives to keep sales going. The supply of homes available for sale is up to 7.8 months' worth in August after 7.3 months in July, but similar to the 7.9 months in August 2023.

Sales of homes not yet started decline to a 13 percent share of all sales, another indication that homebuyers are finding more supply and taking more time before committing to a purchase in a cooler housing market. Sales of homes under construction is 35 percent of the total, while homes completed account for 52 percent of all sales in August.

After missing estimates in the prior three reports, July's 739,000 rate exceeded Econoday's high estimate by nearly 100,000 and, along with upward revisions, repositioned new homes as a new force in the economy. The consensus forecast for September calls for sales to come in only slightly weaker, at 700,000.

New home sales measure the number of newly constructed homes with a committed sale during the month. The level of new home sales indicates housing market trends and, in turn, economic momentum and consumer purchases of furniture and appliances.

This provides a gauge of not only the demand for housing, but the economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as new home sales, investors can gain specific investment ideas as well as broad guidance for managing a portfolio. Each time the construction of a new home begins, it translates to more construction jobs, and income which will be pumped back into the economy. Once the home is sold, it generates revenues for the home builder and the realtor. It brings a myriad of consumption opportunities for the buyer. Refrigerators, washers, dryers and furniture are just a few items new home buyers might purchase. The economic"ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month. Since the economic backdrop is the most pervasive influence on financial markets, new home sales have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the new home sales data carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings companies.