SALES of new U.S. single-family homes increased for a second straight month in August, but demand for housing has probably peaked after a COVID-19 pandemic-fueled buying frenzy.

The report from the U.S. Commerce Department on Friday also showed the supply of new homes on the market last month was the largest in nearly 13 years, with prices unchanged on a monthly basis. It followed on the heels of news last week that sales of previously owned homes fell in August.

“These data suggest that the surge in new home sales during the pandemic has ebbed and inventories of unsold homes have risen to a more normal level in relation to sales,” said Conrad DeQuadros, senior economic advisor at Brean Capital in New York. “This report and the existing home sales data for August suggest that a considerable portion of the flow adjustment of sales to higher demand may have taken place.”

New home sales rose 1.5 percent to a seasonally adjusted annual rate of 740,000 units last month. July’s sales pace was revised up to 729,000 units from the previously reported 708,000 units.

Sales increased 6 percent in the populous south and gained 1.4 percent in the west. They soared 26.1 percent in the northeast, but tumbled 31.1 percent in the midwest. Economists polled previously had forecast new home sales, which account for about 11.2 percent of U.S. home sales, increasing to a rate of 714,000 units.

Sales decreased 24.3 percent on a year-on-year basis in August.

They have struggled to post significant gains since surging to a rate of 993,000 units in January, which was the highest since the end of 2006. Builders have been constrained by higher prices for inputs, as well as shortages of land and labor.

(SD-Agencies)