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Economy in Brief

U.S. New-Home Sales Lowest Since Early-1991
by Tom Moeller September 25, 2008

August sales of new single-family homes dropped 11.5% from July following a little revised 4.0% increase during that month. The latest drop greatly exceeded Consensus expectations. More impressive, however, was that the latest level of sales was the lowest since January of 1991 and it undoubtedly reflected the recent turmoil in the credit markets.

By region, sales in the West fell by one-third from their July level and that pulled sales down 50.0% from the year ago total. From their peak level in 2005, sales out West are down 82.1%. New home sales in the Northeast also were notably weak and they posted a 31.9% m/m decline. The level about equaled where sales were in May but that was down 69.2% from the 2004 peak. New home sales in the South fell a lesser 2.1% m/m but they were still down 60.4% from the early-2005 high. In the Midwest sales recovered 7.2% m/m following three months of sharp decline. However, the latest level still was down 71.1% from the 2003 peak.

The median price for a new single-family home fell 5.5% m/m to $221,900. The 6.2% y/y decline compares to a peak rate of growth of 13.9% back in 2004.

The number of new homes for sale fell further, by a sharp 4.4% (-23.5% y/y). That reduced the inventory of unsold homes to the lowest level since late-2004. In each of the country's regions the inventory is down just short of one-quarter during the last year.

The month's supply of new homes for sale ticked slightly higher to 10.9 and that was near the record high.

Fed Chairman Ben S. Bernanke's testimony the morning on the Economic Outlook can be found here.

US New Homes August July Y/Y 2007 2006 2005
Total Sales (SAAR, 000s) 460 520 -34.5% 768 1,049 1,279
  Northeast 32 47  -45.8 64 64 81
  Midwest 74 69 -39.3 118 161 203
  South 276 282 -24.4 408 559 638
  West 78 122 -50.0 178 266 356
Median Price (NSA, $) 221,900 234,900 -6.2 243,742 243,067 234,208
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