The Commerce Department reported this morning (Sept. 27) that sales of new one-family houses in August fell 8.3% to a seasonally adjusted annual rate of 795,000, 8.3% below the revised July rate of 867,000 and 21.2% below the August 2006 estimate of 1,009,000. It was the worst monthly new-home sales performance since June, 2000.
The report, issued jointly by the Census Bureau and Department of Housing and Urban Development, also put the median price of a new home in August at $225,700, down 8.3% from July and 7.4% from August 2006. The average sales price was $292,000, down 4.6% from July and 7.9% from last August
The seasonally adjusted estimate of new houses for sale at the end of August was 529,000, a supply of 8.2 months at the current sales rate, up 7.9% from July's 7.6 months.
Regionally, sales increased 42.3% over July to a rate of 74,000 in the Northeast; increased 20.5% in the Midwest to a rate of 135,000; decreased 14.7% in the South to a rate of 407,000; and decreased 20.8% in the West to a rate of 179,000. Year-over-year, all regions were down, with the Northeast off 14.9%; the Midwest off 11.2%; the South down 27.1%; and the West down 16.9%.
Carl Reichardt, home building analyst at Wachovia Securities, wrote in a research note, "Based upon the current data, our "Neighborhood Watch" field survey, and commentary from homebuilders reporting earnings this week, it is clear to us that conditions in August dramatically deteriorated over those in July." He continued, "We saw meaningful price reductions this month in the new home data with an 8.3% sequential decline, the largest it has been since September 1981, when prices fell 9.4% sequentially. On a yr/yr basis, the 7.5% median price decline is the most significant since December 1970."
Still, Reichardt remains pessimistic. "Despite price declines, orders are not responding, suggesting a dangerous lack of elasticity, in our view."