Oliver Allen, senior U.S. economist at Pantheon Macroeconomics, isn’t buying it. In a research note titled US New Home Sales: Outlook grim, despite August’s implausible leap in sales, Allen says the data “defies credulity” when set against the broader trends shaping housing. He further questioned whether the headline spike accurately reflects underlying demand, or is destined to be revised away in the coming months. Calculating it as a 20.5% jump, Allen said it’s “inexplicable” that new-home sales would jump to their highest level in more than three years all of a sudden.

The National Association of Home Builders (NAHB) was more restrained. Chairman Buddy Hughes, also a home builder and developer from Lexington, N.C., called it “a significant surge” and said it “may be subject to downward revision.” Still the association expects a general improvement in sales over the coming months, supported by mortgage rates declining somewhat. New-home sales have been buoyed by incentives from homebuilders, the NAHB said, citing recent survey data showing 37% of builders cut prices in August and 66% used some kind of sales incentive.

Headwinds still mounting

Beneath the data surprise, the structural forces bearing down on the housing market remain clear. Higher mortgage rates, tighter credit availability, and growing signs of labor-market weakness have narrowed the pool of eligible buyers. At the same time, the supply of existing homes on the market continues to recover after years of scarcity, intensifying competition for homebuilders already under pressure to move inventories.

The stock of unsold new homes remains historically elevated, hitting its highest point since 2016 as of June, per the Bank of America Institute. New-home supply had surged by that point to 9.8 months—its highest point since 2022. ResiClub co-founder Lance Lambert, who closely follows data releases from public homebuilders and collects his own proprietary housing data, told Fortune in July that rising inventory means homebuyers were gaining leverage, setting the stage for a potential increase in activity ahead.

The government report also showed a sharp monthly spike in the median sales price of a new single-family home. But Allen cautions against reading too much into that, noting the series is not seasonally adjusted and is prone to volatility. On a seasonally adjusted three-month basis, median prices continue to trend lower, suggesting discounting pressure is already emerging.

Look at the larger trend

Most economists now expect August sales to be revised significantly lower. Pantheon Macroeconomics projects the data will track back toward the 650,000 range in coming months—possibly falling below that threshold—as supply and affordability challenges reassert themselves.

When reached for comment, Lambert told Fortune agreed with Allen for this report, saying the data “seems to be suspect,” citing what public homebuilders are reporting and the data that ResiClub is collecting itself. “Most of the monthly Census homebuilder reports have a margin of error around 10% to 20%,” Lambert said. “Often really big one-month swings in that data end up being data noise. The best way to read this data is to take each individual monthly report with a grain of salt and zoom out and observe the trend.”

And what trend is that? Lambert says to pay attention to the Sun Belt, which he called “the epicenter of U.S. homebuilding.” Agreeing with the NAHB survey, Lambert said softening in the Sun Belt over the past year has caused many homebuilders to offer bigger incentives and even outright price cuts to prevent a steeper pullback in new-home sales. “New-home sales have been moving sideways this year; however, if you peel back the onion, things are much choppier than headline new home sales data suggests.”