August new home sales dip, but prices scale 5-year high

by 26 Sep 2012


(Reuters) - New U.S. single-family home sales eased in August but held near two-year highs and prices vaulted to their highest level in more than five years, adding to signs of a broadening housing market recovery.

The Commerce Department said on Wednesday sales slipped 0.3 percent to a seasonally adjusted 373,000-unit annual rate. July's sales pace was revised up to a 374,000-unit pace, the highest level since April 2010, from the previously reported 372,000 units.

Economists polled by Reuters had forecast sales at a 380,000-unit rate last month. Compared to August last year, new home sales were up 27.7 percent.

Despite the month-on-month dip in sales, the report was consistent with other data that have suggested a turn-around in the housing market after collapsing in 2006 and igniting the 2007-09 recession.

Home resales surged last month and homebuilder sentiment jumped to a six-year high in September. However, the housing market recovery lacks sufficient strength to take the baton from manufacturing as the main driver of the economic recovery.

The Federal Reserve moved this month to bolster the economy, announcing it would buy $40 billion in mortgage-backed securities per month until the outlook for employment improved significantly.

Last month, the median price of a new home increased a record 11.2 percent to $256,000 -- the highest level since March 2007. Compared to August last year, the median sales price jumped 17 percent, the largest rise since December 2004.

COMMENTS

  • by William Matz | 9/26/2012 3:07:30 PM

    I know I am beating a dead horse, but the price info in the article is worthless. An 18-month slowdown during the attorney general investigation has lowered inventory in the lower price ranges. Lower inventory = fewer sales. Fewer sales at the lower end means the median price goes "up". But that tells us nothing about whether home prices are rising. And what happens now that foreclosures are increasing again?

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