New-home sales continued to bounce along the bottom in August, hitting a seasonally adjusted annual rate of 295,000, according to data released today by the U.S. Census Bureau and the Department of Housing and Urban Development. That number is down 2.3% from July’s revised rate but up 6.1% from August 2010.
"This is shaping up to be the worst year on record," said Patrick Newport, U.S. economist at IHS Global Insight, who predicts that total new-home sales for 2011 will amount to only 307,000. "Sales would have to average more than 359,000 every month for the rest of the year to not set a record low, and that [monthly rate] would be a big jump from where we are now."
Newport expects a slight uptick next year, predicting sales will reach 350,000.
Prices fared no better in August, as builders continued to battle with foreclosures for customers. The median price of a new home fell 5.8% from July to $209,100, and the average price of a new home fell even further with a staggering 9.7% drop. Yet even after the monthly declines, the median price for a new home still stood 20% higher than the median price of an existing home in August, a month in which 31% of all existing-home sales were distressed properties.
In the report’s only bright spot, inventory is also in record-low territory, with the number of new homes for sale standing at 162,000 in August, the lowest number since data started being collected in 1963; the number of completed homes for sale declined to 60,000, the lowest level since 1971.
On a regional basis, the Northeast felt the drop the most, with a dip of 13.6% compared to July. On an annual basis, sales in the area have dropped 36.7%, and now stand at an annual rate of only 19,000. While the Midwest held the second-lowest sales rate among regions (53,000), the area saw the largest increase in sales with gains of 8.2% and 65.5% on a monthly and yearly basis, respectively. The South, with an annual rate of 164,000, saw sales drop 2.4% from July, but gain 9.3% from the previous year. And the West, with an annual rate of 59,000, dropped 6.3% on a monthly basis and 10.6% on a yearly basis. (All annual rates are seasonally adjusted.)
Claire Easley is a senior editor at Builder.
Learn more about markets featured in this article: Greenville, SC.