Washington – Sales of new homes tumbled in August to their lowest level in seven years, a stark sign that the credit crunch is aggravating an already painful housing slump.
Sales of new homes dropped 8.3 percent in August from July, the Commerce Department reported Thursday, driving down sales to a seasonally adjusted annual rate of 795,000. That was the lowest level since June 2000.
“This is just hideous,” said Ian Shepherdson, chief economist at High Frequency Economics.
In the Denver metro area, builders sold 5,842 homes in the first half of the year, a third fewer than the 8,758 sold in the same period a year earlier, according to an August report by the Genesis Group. The inventory of unsold new homes during that period – the most recent information available – was 3,632, up 3.8 percent from last year.
The Commerce Department home-sales report came on the same day the government reported a relatively brisk business growth rate in revised figures for the second quarter. But the 3.8 percent pace was less than previously estimated, and it occurred before the credit crisis and its repercussions across the broad spectrum of the economy had taken hold.
Home prices nationally tanked.
The median sales price in August fell by 7.5 percent from a year earlier to $225,700. That was the biggest drop in percentage terms in nearly 37 years. The median price is the point at which half sell for more and half for less. The average sales price dropped by 8 percent in August from a year earlier to $292,000.
That was the biggest decline in 17 years.
In Denver, the average price for a new home this year has been $353,700, compared with $339,900 in 2006, according to Genesis.
The new-home sales report, combined with other recent economic reports showing a sharp drop in demand for big-ticket manufactured goods in August, suggested the economy lost momentum as it headed into the fall.
On Wall Street, though, stocks rose. Investors found a silver lining in the weak home-sales report. They believed it would increase the odds of a rate cut by the Federal Reserve next month.
