I travel the country in connection with our clients’ business, but also to make presentations to state and national associations within the construction materials industry, including ready mixed concrete, aggregates, and precast groups. Over the course of the last 18 months, in reviewing the financial performance of each of these industries, I have noted that the new home construction industry has been in an interest-rate-driven lull, contributing to the 10% drop in overall construction materials volume over the past 24 months. And I have said, over and over again, that when we saw even the slightest quarter-point drop in interest rates – and the signals of more to come – watch the pent-up demand of homebuyers come flying off the benches like a ballgame melee.
Well, I was right.
According to figures compiled by the National Association of Home Builders (NAHB), new home sales posted an unexpectedly large gain in August. A modest drop in mortgage rates led to a surprisingly large jump in new home sales. Remember, the logic in the minds of current homebuyers is simple: get an Adjustable Rate Mortgage (ARM) and buy the house now. As the months go by, rates will come down and their monthly payments will follow. This makes more sense than waiting, as record inflation in housing prices just barrels onward. And while many can afford to sit and wait because they hold 2% mortgages and have no pressure to act, other homebuyers confront an urgency that presses them into the market: a job relocation, a new baby on the way, or an Empty Nester urge to downsize after raising a family.
Sales of newly built single-family homes jumped an eye-watering 20.5% in August to a seasonally adjusted annual rate of 800,000 from an upwardly revised reading in July, according to newly released data. The pace of new home sales is up 15.4% from a year earlier, while the three-month moving average of new home sales was 713,000, an increase from 656,000 in July.
However, the Census Bureau’s estimate of new home sales is often volatile from month to month and is subject to significant revisions. Despite the sharp monthly increase in estimated August sales, the NAHB expects a gradual improvement in new home sales, supported by a recent interest rate cut and downward trend in mortgage rates. Accordingly, it is possible the August Census reading will be revised lower in the next reporting.
To explain the reporting technique, a new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction, or completed. In addition to adjusting for seasonal effects, the August reading of 800,000 units is the number of homes that would sell if this pace continued for the next 12 months.
New single-family home inventory declined for the third straight month to 490,000 residences marketed for sale in all stages of construction as of August. This is 1.4% lower than the previous month and 4.0% higher than a year earlier. At the current sales pace, the months’ supply for new homes was 7.4 compared to 8.2 a year ago. The decline in inventory reflects a recent slowing of home-building starts.
A year ago, there were 104,000 completed, ready-to-occupy homes available for sale. By the end of August 2025, that number increased 18.3% to 123,000. However, completed, ready-to-occupy inventory remains just 25% of total inventory, while homes under construction accounted for 53%. The remaining 21% of new homes for sale in August were those that had not started construction when the sales contract was signed.
The median sale price of new homes rose to $413,500 in August, a 1.9% increase from a year ago. In August, 20% of new homes were priced below $300,000, while 31% were priced above $500,000. Notably, the share of new homes priced below $300,000 reached its highest level in the past 11 months.
Expect this good news for the concrete industry to continue next year as rates continue to fall.
Pierre G. Villere serves as president and senior managing partner of Allen-Villere Partners, an investment banking firm with a national practice in the construction materials industry that specializes in mergers & acquisitions. He has a career spanning almost five decades, and volunteers his time to educating the industry as a regular columnist in publications and through presentations at numerous industry events. Contact Pierre via email at [email protected]. Follow him on Twitter – @allenvillere.