Put pervasive builder incentives and a meaningful decline in mortgage rates together in a cauldron with a dash of Huy Fong Sriracha, stir it all up and whaddya get?

The largest month-to-month increase in new US home sales in three years, apparently.

Wednesday’s update on new residential sales across America’s otherwise gridlocked housing market showed the annual pace of new home-buying rose to 800,000 in August, up dramatically from July’s rate and a mile above the 650,000 consensus.

The MoM percentage gain, nearly 21%, was the largest since August of 2022. The pace was the briskest since January of that year.

The figures come with the usual cautionary footnote: This series is extraordinarily volatile.

Gains in August were led by the Northeast. Sales in the South, the largest market, jumped almost 25% to a 530,000 annual rate.

Recall that the September NAHB builder survey found that four in 10 cut prices this month in a bid to unload a mountain of unsold inventory. Between incentives and the lowest rates in a year, that pile fell in August to 490,000 units, the fewest of 2025.

And yet, as the figure shows, we’re still staring at a pretty daunting supply glut on the new construction side. Months’ supply fell to 7.5, the lowest since April of 2024.

Somewhat amusingly considering the “price cuts are spurring sales” explanation, both the median and average sale price jumped sharply from July and also from the same month a year ago.

At $413,500, the median erased two months of declines, and was up 2% YoY. The average price soared 12% to $534,100, the third-highest on record.