U.S. new-home sales surged to the highest in nearly eight years in July as builders picked up the pace while buyer demand remained robust.
Sales of newly constructed homes rose 12.4% to a seasonally adjusted annual rate of 654,000, the Commerce Department said Tuesday. That was 31.3% higher than a year ago, and easily beat forecasts of a 581,000 pace from economists surveyed by MarketWatch.
June’s figure was revised downward slightly, to 582,000.
The median sales price in July was $294,600, 0.5% lower than year-ago levels. As sales soared, supply dwindled to 4.3 months’ worth of homes at the current pace.
On Tuesday, luxury home builder Toll Brothers TOL, +3.27% reported double-digit profit and revenue growth for its second quarter. “The solid economy and employment picture are also benefiting our target customers,” executive chairman Robert Toll told analysts.
Analysts and economists have waited to see stronger activity from home builders as the economic recovery drags on and the job market strengthens. Builders have been wary of ramping up construction to pre-crisis levels, but with demand running so much hotter than inventory, and new construction favoring higher-end customers, the housing market has struggled to find equilibrium.