New Home Sales Fell in August as For-Sale Inventory Climbed

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The U.S. Census Bureau and the Department of Housing and Urban Development reported Wednesday morning that sales of new homes in August slipped to a seasonally adjusted annual rate of 560,000, a decrease of 3.4% below the upwardly revised July rate of 580,000 and a drop of 1.2% compared with the August 2016 rate of 567,000. The consensus estimate from a survey of economists expected a rate of around 583,000. The June rate was revised upward by 9,000.

At the peak in 2005, new home sales posted a seasonally adjusted annual rate of nearly 1.4 million.

The Census Bureau also reported that the median sales price for new homes sold in August fell by $12,200 from $312,700 in July to $300,500, and the average sales price fell by $3,100 to $368,100. At the end of August the number of new homes for sale totaled 284,000 and represented a supply of 6.1 months at the current sales rate.

In August, 50% of the estimated 45,000 monthly sales were sales for homes priced at less than $300,000. The percentage is up three percentage points compared with the July rate. Sales of homes priced between $300,000 and $399,999 fell by three points to 23% of all sales. Sales of homes in the range of $400,000 to $499,999 fell from 14% of sales to 12%, and sales fell from 10% to 8% for homes sold in a range of $500,000 to $749,999. Home sales for properties priced above $750,000 accounted for 6% of all new home sales in both July and August.

The modest price increase from June to July fell sharply in August, and the increase in sales of houses priced below $300,000 indicates that first-time buyers took advantage of the reduced prices. Inventories rose by 8,000 month over month and are up 47,000 year over year. The number of houses for sale in August was the highest so far in 2017.