FIGURES RELEASED IN EARLY AUTUMN SHOW that sales of new homes beat analysts' expectations, ending the summer with the largest increase since the end of 2000. The report from the Commerce Department showed that single-family home sales increased 9.4 percent from an annualized pace of 1.082 million units in July to 1.184 million in August, as sales jumped 20 percent in the West, 13 percent in the South, and 6.1 percent in the Northeast. The median sales price fell to $208,900 from $214,400 the month before, and the inventory of new homes for sale fell to a 4.2-month supply from 4.4 months. The Mortgage Bankers Association reported a 1.6 percent increase in August in applications to purchase a home.
Some economists are predicting that home sales will reach record highs for all of 2004, helped out by relatively low mortgage rates. Housing construction went up in all regions of the country in August except for the West.
Builders in the Northeast broke ground on 196,000 units in August, a 6.5 percent increase from July's level. In the Midwest, housing construction was up 4.8 percent to a rate of 370,000. In the South, housing starts went up 1 percent to a pace of 907,000. But in the West, housing construction dropped by 4.7 percent to a pace of 527,000.
The housing and residential construction markets have been good sources of strength for the nation's economy, which grew at a 2.8 percent rate in the second quarter. Economists believed it picked up speed in the July-to-September quarter, growing at a rate of around 3 percent to 4 percent.