New home sales down in August: report

Sales of newly built, single-family homes declined 2.3 percent to a
seasonally adjusted annual rate of 295,000 units in August, according
to data from the U.S. Commerce Department released today, a decline
from 302,000 in July.

The inventory of new homes for sale fell to 162,000 units in August, a
new record low. However, due to the slower sales pace, the month’s
supply of new homes rose slightly, to 6.6 percent.

“The number of foreclosed homes on the market continues to pose major
challenges, not just to builders who have to compete against that
low-priced product, but also to buyers who need to sell an existing
home before trading up to a new one,” said Bob Nielsen, chairman of
the National Association of Home Builders and a residential developer from
Reno, Nev. “As the price data show, entry-level homes are generally
driving the new-home market right now, and that’s because first-time
buyers don’t have another home they have to sell.”

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The only region to register an increase in new home sales in August
was the Midwest, where sales rose 8.2 percent. Meanwhile, the
Northeast, South and West posted declines of 13.6 percent, 2.4 percent
and 6.3 percent, respectively.

“As builders in our recent surveys have been telling us, the lull in
new home sales continued even as mortgage rates held at extremely
favorable levels in August. This is partly because continuing tight
credit conditions are dissuading even well-qualified buyers, who are
having trouble obtaining the good rates that are out there,” said
David Crow, NAHB’s chief economist. “However, on a positive note,
today’s numbers confirm that builders are wisely refraining from
adding to the inventory of unsold new homes, which is currently at a
49-year low.” — Miranda Neubauer