Sales of new homes increased 4.1% in August to a seasonally adjusted annual rate of 1.05 million from a three-year low in July, the Commerce Department reported Wednesday.
It was the first increase in new-home sales since March.
Sales are down 17.4% in the past year and are down 23% from the peak last July.
Sales in May, June and July were revised sharply lower. July’s sales pace was revised to 1.009 million, the lowest since March 2003, from an earlier 1.072 million.
According to the MarketWatch survey, economists were expecting sales to fall about 3.4% in August to a seasonally adjusted annual rate of 1.036 million. The August result is about 1.4% higher than expected.
The supply of unsold homes dropped 0.4% to 568,000, representing a 6.6-month supply at the August rate from 7.0 months in July.
The median sales price of a new home fell 1.3% year-on-year to $237,000, the first year-on-year decline since 2003. The sales price does not reflect the massive incentives builders have been offering to close deals.
Despite the sales increase in August, there’s little reason for near-term optimism about new home sales, economists said.
From the Census Department:
Sales of new one-family houses in August 2006 were at a seasonally adjusted annual rate of 1,050,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4.1 percent (±15.5%)* above the revised July rate of 1,009,000, but is 17.4 percent (±11.0%) below the August 2005 estimate of 1,271,000.
The median sales price of new houses sold in August 2006 was $237,000; the average sales price was $304,400. The seasonally adjusted estimate of new houses for sale at the end of August was 568,000. This represents a supply of 6.6 months at the current sales rate.
Keep in mind these numbers are being consistently adjusted downwards, some times significantly, in hindsight. Can the downward adjustment trend be any more obvious?
New Home Sales (in thousands)
Initial – 1,233
Revised – 1,173 (Down 4.9%)
Initial – 1,080
Revised – 1,038 (Down 3.9%)
Initial – 1,213
Revised – 1,121 (Down 7.6%)
Initial – 1,198
Revised – 1,121 (Down 6.4%)
Initial – 1,234
Revised – 1,101 (Down 10.8%)
Initial – 1,131
Revised – 1,091 (Down 3.5%)
Initial – 1,072
Revised – 1,009 (Down 5.8%)
Update: Added a graph of the New Home Sales Initial and Revised Numbers