Sales of new homes down 7.6% in Au­gust

Daily Local News (West Chester, PA) - - BUSINESS - By Martin Crutsinger AP Eco­nomics Writer

WASH­ING­TON » Sales of new homes re­treated in Au­gust, one month af­ter surg­ing to the high­est level in nearly nine years. Ac­tiv­ity fell in all re­gions of the coun­try ex­cept the West.

New home sales dropped 7.6 per­cent last month to a sea­son­ally ad­justed an­nual rate of 609,000 units, the Com­merce De­part­ment re­ported Mon­day. That fol­lowed a surge in sales in July when they jumped 13.8 per­cent to a rate of 659,000, the fastest pace since Oc­to­ber 2007.

Sales had been ex­pected to slow fol­low­ing the July surge.

Even with the Au­gust de­cline, sales of new homes are up a solid 20.1 per­cent from a year ear­lier. Jen­nifer Lee, se­nior econ­o­mist at BMO Cap­i­tal Mar­kets, pointed to a num­ber of pos­i­tive fac­tors help­ing the hous­ing mar­ket.

“Home­builder con­fi­dence is up and price growth has slowed, which is good news for first-time home­buy­ers, as are eas­ing credit stan­dards and low mort­gage rates,” she wrote in a re­search note.

The me­dian price of a new home sold in Au­gust was $284,000, down 3.1 per­cent from July and 5.3 per­cent lower than a year ago.

One prob­lem weigh­ing on the in­dus­try is a lack of avail­able homes for sale, both in the new home cat­e­gory and ex­ist­ing homes. Sales of ex­ist­ing homes slipped 0.9 per­cent in Au­gust

to an an­nual rate of 5.33 mil­lion units.

At the Au­gust sales pace, it would take 4.6 months to ex­haust the sup­ply of new homes on the mar­ket. That’s up from 4.2 months’ sup­ply in July. Both months rep­re­sent low in­ven­tory lev­els, even though con­struc­tion of new homes has ac­cel­er­ated for most of this year. Builders would like to boost con­struc­tion even more, but they face ris­ing land and la­bor costs.

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