New home sales stuck at the bottom in August
Sales of newly built homes in the U.S. appear to be stuck at the bottom.
The August read on new home sales showed properties selling at a seasonally adjusted rate of 295,000, down 2.3% from a revised July rate of 302,000 and just 6.1% above August 2010, according to the Commerce Department.
"With job growth at a standstill, the stock market swinging wildly, Congress wrangling over the debt ceiling and the euro zone’s problems sending consumer confidence down, sales of new homes are slipping from an already weak pace," Celia Chen, director of housing economics at Moody’s Analytics, wrote in a note Monday morning. "New-home sales fell below the 300,000 mark in August and are nearing the cyclical (and 48-year) low of 278,000 that sales hit in August 2010."
Patrick Newport, U.S. economist with IHS Global Insight, said that the trend for new home sales has been flat for the last 16 months.
"This year is shaping up to be the worst year on record for new home sales," Newport wrote in a note.
An estimated 162,000 newly built homes were on the market in August, representing a supply of a little more than six months and two weeks. A supply of about six months typically represents a healthy market, so if sales do pick up in a meaningful way then new construction is likely to feel a boost.
The median sales price of a new home, which is the point at which half the new homes sold for more and half for less, fell nearly 9% to $209,100 in August. That was the lowest price since October.
The steep drop in prices indicates that builders are struggling to attract buyers from even cheaper so-called distressed properties, homes that are foreclosures or have a borrower in default.
-- Alejandro Lazo
Photo: A Meritage Homes Corp. for sale sign lies on the ground near a construction site recently in Gilbert, Ariz. Credit: Bloomberg