Sales of newly built, single-family homes surpassed the 1 million mark in August, according to the National Association of Home Builders.

Month-over-month sales rose 4.8% to a seasonally adjusted annual rate of 1.01 million units – the highest pace since September 2006, according to data from the US Department of Housing and Urban Development and the US Census Bureau. On an annual basis, the August rate is 43.2% higher than the August 2019 pace.

“Surging sales are consistent with record builder confidence levels stemming from higher buyer traffic, historically low interest rates and a shift in demand for lower-density markets,” said NAHB Chairman Chuck Fowke. “However, higher lumber costs and limited building material availability in some markets signify we could see higher prices down the road.”

Inventory declined 40% year over year to a 3.3-month supply, with 282,000 new single-family homes for sale. NAHB said that the August supply is the lowest in the history of the data series. Of the total inventory, only 54,000 are completed and ready to occupy. The median sales price of a new home was $312,800, down from $327,000 a year ago.

On a year-to-date basis, new home sales were up in all four regions: 23.6% in the Northeast, 23.6% in the Midwest, 13.9% in the South, and 12.4% in the West.

“New home sales are now 15% higher on a year-to-date basis, with gains in all regions,” said NAHB Chief Economist Robert Dietz. “But with inventory at just a 3.3 months’ supply, more construction is needed. The challenge will be whether materials and labor are available.”