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New Single-Family Home Sales Dip in August
Drop Expected After Strong Showing in July


New home sales dropped in August, but are well up year-over-year and year-to-date.

Sales of new single-family homes fell in August, but not as far down as the consensus estimate.

Census Bureau data shows sales declined 7.6 percent month-over-month. However, Construction Dive said economists expected it to drop 8.0 percent because sales put up a solid 12.4 percent hike in July, the strongest since October 2007.

Sales are up 20.6 percent year-over-year, and also 13.3 percent in the first eight months of 2016, compared to the same time frame last year.

"That upward (year-to-date) trend echoes predictions of a slow and steady recovery, rather than a sudden boom in activity," Construction Dive said.

Sales dropped in three of the four U.S. regions from July to August: Northeast, -34.3 percent; South, -12.3 percent; Midwest, -2.4 percent. The West expanded by 8.0 percent. The median sales price of new houses sold in August was $284,000, while the average sales price was $353,600, the Census Bureau said.

"The fact that the median sales price of new homes dipped again last month indicates that builders are likely moving down in price point and offering more entry-level and affordable homes -- answering the calls of first-time buyers and real estate agents," Construction Dive said.

Architecture Billings Index Shrinks in August
The AIA's Architecture Billings Index shrank in August to a level that indicates the market is contracting. It is, however, only the second month in 2016 that the ABI has fallen below its benchmark level of 50.

August's ABI reading of 49.7 reflects a decrease in design services. Any score above 50 indicates an increase in billings. The ABI was at 51.5 in July.

As a leading economic indicator of construction activity, the ABI reflects the approximate nine-to-12-month time lapse that typically happens between architecture billings and construction spending.

"This is only the second month this year where demand for architectural services has declined, and it is only by a fraction of a point," said Kermit Baker, AIA chief economist. "Given the solid numbers for new design contracts and project inquiries, it doesn't appear that this is the beginning of a broader downturn in the design and construction industry."

"The AIA isn't concerned (about the August ABI score)," Construction Dive said. "New projects inquiries scored 61.8 on the index in August, an increase from 57.5 in July, and design contracts came in at 52.7 in August, up from 51.8 in July -- indicating a forthcoming need for design services, which result in billings and lead to construction spending."

Regional ABI averages: Midwest, 52.8; Northeast, 44.9; South, 55.2; West, 49.0.

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July 17, 2019, 8:31 pm PDT

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