New-home sales dived to the lowest level in 17 years during August and prices kept dropping, a Commerce department report said Thursday. However in the Midwest, new-home sales actually rose 7.2% Sales of single-family homes decreased nationally by 11.5% last month to a seasonally adjusted annual rate of 460,000. Economists had forecast an August sales rate of 508,000. The level of 460,000 was the lowest since 401,000 in January 1991.Home sales have fallen four times in six months. New-home sales were 34.5% lower during the same time August 2007. Mortgage credit has tightened. High inventory of unsold homes are hurting the housing market – and the rest of the economy. The surplus is driving prices down. Falling prices, in turn, are keeping would-be buyers from signing on the dotted line as they wait for a better deal. Builders are breaking new ground at a declining rate, discouraged by excess supply and declining sales.
In a promising sign, inventories fell, down to an estimated 408,000 homes for sale at the end of August from July’s 427,000. The figure of 408,000 was the lowest since 405,000 in August 2004. But because sales fell so sharply, the ratio of new houses for sale to houses sold in August climbed, rising to 10.9 from 10.3. Builders suggest a figure of six months, or 6.0, indicates a healthy balance between supply and demand.
An estimated 39,000 homes were actually sold in August, down from 44,000 in July, based on figures not seasonally adjusted Source: The Wall Street Journal
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