U.S. new home sales soared last month, exceeding expectations for another slowdown although the months' supply of new homes for sale plunged 17.8 percent from July, and is down almost 10 percent compared to August 2024. New home sales in the Northeast region (72.2 percent) powered last month's surge, with strong contributions from the South (24.7 percent) and Midwest (12.7 percent) regions.

Sales of new single-family houses in August are estimated at an 800,000 annual rate, a significant improvement from the revised 664,000 reported for July (previously 652,000), and beating the 649,000 expected in the Econoday survey of forecasters.

August's new home sales rate is 20.5 percent stronger than July, and 15.4 percent above the August 2024 rate of 693,000.

The median sales price of new houses sold in August was $413,500 compared to $395,100 in July, and $405,800 in August 2024. The average sales price was $534,100.

The inventory of new houses for sale declined from 497,000 at the end of July to 490,000 at the end of August. The months' supply was 7.4 months in August, compared to 9.0 months in July at the current sales rate. Inventory was at 8.2 months of supply in August 2024.

Sales are going nowhere at an annual 649K rate in August versus 652K in July.

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.