Alan Zibel
USA Today
WASHINGTON — New U.S. home sales posted a tepid 0.7% increase last month, missing Wall Street expectations and providing more evidence that the housing market recovery remains tentative.
The Commerce Department said Friday sales inched up to a seasonally adjusted annual rate of 429,000 from a downwardly revised 426,000 in July. Economists surveyed by Thomson Reuters had expected a pace of 440,000.
While it was the fifth straight increase and the strongest report in 11 months, sales were 4.3% lower than the same month last year. Sales have risen 30% from the bottom in January, but are off about 70% from the peak of four years ago.
The report was the second straight disappointing sign for the U.S. housing market, which is struggling to emerge from the most severe bust in generations. On Thursday, the National Association of Realtors said sales of previously occupied homes dipped 2.7% last month.
Builders continue to make severe cuts in prices to attract buyers. The median sales price of $195,200 was off 11.7% from $221,000 a year earlier, and 9.5% below July’s level of $215,600. That was the largest monthly drop on records dating to 1963.
There were 262,000 new homes for sale at the end of August, down more than 3% from July and the lowest in nearly 17 years. At the current sales pace, that represents 7.3 months of supply — the smallest amount since early 2007. The decline means builders have scaled back construction to the point where supply and demand are coming into balance.
Buyers, meanwhile, are rushing to take advantage of a federal tax credit that covers 10% of the home price, or up to $8,000 for first-time owners. Home sales must be completed by the end of November for buyers to qualify. Builders and real estate agents are pressing Congress for that credit to be extended.
Sales varied dramatically around the country. The best performance was in the West, where sales rose more than 12%, and the worst was in the Northeast, where sales sank more than 16%. They were unchanged in the South, and down nearly 6% in the Midwest.
Meanwhile, major builder KB Home posted a smaller third-quarter loss of $66 million on Friday as it reduced costs and said new home orders increased. Still, the results missed analysts’ expectations.
Copyright 2009 The Associated Press. All rights reserved
