U.S. new home sales plunge 11.5 percent in August

September 25, 2008 by · Leave a Comment
Filed under: Real Estate News 

US new home sales plunged 11.5 percent in August despite a sharp drop in prices, government data showed Thursday, with tight credit blamed for further distress in the battered real estate sector.

The Commerce Department report on new home sales underscored the gloom over the US housing sector, struggling with the worst slump in decades, and a credit crisis that has strangled mortgage lending.

The monthly data came as Congress struggled to pass an emergency 700-billion-dollar bailout of financial firms that the government argued was crucial to prevent a wider economic collapse.

The Commerce Department reported that sales of new one-family homes, a bellwether for the housing market, stood at a seasonally adjusted annual rate of 460,000 units in August.

The August number was sharply lower than the consensus analyst forecast of a pace of 518,000 units, and was a hefty 34.5 percent slower than a year ago.

The plunge last month followed a rise in new home sales in July, which the department upwardly revised by 9.7 percent to a rate of 520,000 units.

“August figures reflect that the housing market is significantly affected by the tightening of credit conditions. Residential real estate remains depressed at the time being as financial conditions are not favorable,” said Amine Tazi, analyst at Natixis.

The median sales price of new houses sold in August was 221,900 dollars, down from 263,900 a year ago, the department said.

The seasonally adjusted estimate of new houses for sale at the end of the month was 408,000, representing a 10.9-month supply at the current sales pace.

On Wednesday, the National Association of Realtors reported existing home sales, a significantly larger market, fell by a more-than-expected 2.2 percent in August after two months of gains.

However, new home sales data traditionally signals the direction of the housing market because existing home sales numbers usually reflect a sales contract signed a month or two in advance.

Source: AFP

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