“Home prices are reaching new highs, but thanks to today’s mortgage rates, demand hasn’t skipped a beat,” said Ali Wolf, chief economist at Meyers Research. “The housing market continues to be the standout sector of the entire economy.”

According to the press release, pending new home sales trended above August 2019 levels in nearly every top market across the country (see Table). Activity in New York is still down year-over-year but has posted a month-over-month increase for the fourth consecutive month.

The best new home markets in August were Austin, Raleigh, and Tampa. The economies in these markets have been rapidly improving from earlier this year, and those employed are looking to lock in their monthly payment with today’s low rates. In addition, these markets have been leaders in positive net migration for years and have only seen that trend grow as COVID-19 shifted priorities for many buyers. Furthermore, Austin has the highest population share of Millennials among top cities in the country and Raleigh is the sixth highest. Millennials are the number one home buyer today and are boosting local home sales.

“Builders expected 2020 to be a good year for housing, but not even the most brilliant of forecasters could have predicted sales in August to be up over 50% year-over-year in some markets,” said Wolf. “All of the success comes with challenges, however, as builders look to replace sold lots and deal with supply-chain issues.”