New home sales rise for 5th straight month
August sales inch up by 0.7% from July but are 3.4% lower than year-ago sales.
NEW YORK (CNNMoney.com) -- Sales of newly constructed homes rose for the fifth straight month in August, a government report said Wednesday.
New home sales inched up 0.7% last month to a seasonally-adjusted annual rate of 429,000, the Commerce Department reported. That was an increase from a downwardly-revised reading of 426,000 in July.
August sales came in well below economists' consensus estimate of 440,000, compiled by Briefing.com
New home sales were also 3.4% below August 2008, when the estimate stood at a 444,000 annual rate.
Supply. The seasonally-adjusted estimate of new home inventory at the end of August was 262,000, which represents a 7.3-month supply at the current sales rate.
"Price cuts and dramatic cutbacks in home construction are clearing out inventory in a big way," said Mike Larson, analyst at Weiss Research, Inc., in a research note. "We now have the fewest new homes for sale in this country since November 1992."
In fact, supply is almost at the point where prices "can be expected to be broadly stable," said High Frequency Economics analyst Ian Shepherdson in a research note.
In recent months, plunging mortgage rates have helped draw buyers into the market. Though rates have rebounded slightly to 5.36% for a 30-year fixed mortgage, levels are still well below last year's rates, which stood at 6.32% in August 2008.
The housing market has also seen a boost from an $8,000 tax credit for qualified first-time home buyers. That credit is currently slated to expire December 1.
But it's not all good news in the housing market. In a separate report on Thursday, the National Association of Realtors said that August sales of previously-owned homes fell 2.7% from July to 5.1 million units, well below analyst expectations of 5.35 million.
Where homes are selling. Sales in the West jumped by 12.1% to 120,000 homes, from 107,000 in July. Activity in the South stayed flat at 224,000 units.
The Northeast saw new home sales plunge 16.3% to 36,000, from 43,000 the previous month. Midwestern sales also fell, by 5.8% to 49,000.
Median and average prices: The median sales price of new homes fell significantly, to $195,200, from a revised $215,600 in July. The average price sank to $256,800 in August from $273,100.
Shepherdson noted the median home prices do not take into consideration that many of the new homes being sold are smaller residences being sold to first-time buyers.
"With more first-time buyers in the market than usual, the published median price data will likely keep falling," he said.