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Economy in Brief

U.S. New Home Sales Rise For Fifth Straight Month As Prices Decline To 2003 Low
by Tom Moeller September 25, 2009

Sales of new single-family homes rose during August for the fifth consecutive month of increase. The seasonally adjusted annual sales rate of 429,000 was up a disappointing 0.7% from a downwardly revised July level of 426,000. Nevertheless, sales have risen by nearly one-third from their January low. August sales fell short of expectations for 440,000.

Price discounts seem to have prompted the latest rise in sales. The median price of a new home fell to $195,200 from an upwardly revised July level. The latest figure, which was down 11.7% y/y, was the lowest level since October of 2003. The average price of a new home was less weak and off 3.3% y/y.

Only sales in the West posted an increase last month. The 12.1% m/m gain was to the highest level since July of last year. Sales have risen by nearly one-third from their low but were three-quarters below the 2005 high. That m/m gain in the West was offset by the second consecutive monthly sales decline in the Midwest. Sales there still were off by almost one-third from last year and by 81% from their 2003 peak. Sales in the Northeast also reversed most of their July gain with a 16.3% decline which left them two-thirds below the 2004 peak. In the South sales were unchanged m/m but still were off by two-thirds from the 2005 peak.

Price discounts, higher sales and much lower housing starts have combined to lower the overhang of unsold homes. The August decline dropped them by more than one-third versus last year to the lowest level since 1992. In the West the number of homes for sale fell to a record low. The months' supply of unsold homes at 7.3 months was down from the high of 12.4 months registered in January.

Longer Days, Fewer Weekends is today's speech by Fed Governor Kevin Warsh and it can be found here.

US New Homes August July June Y/Y 2008 2007 2006
Total Sales (SAAR, 000s) 429 426 400 -3.4% 481 769 1,049
  Northeast 36 43 34  28.6 35 64 64
  Midwest 49 52 62 -31.9 69 118 161
  South 224 224 195 -11.1 264 408 559
  West 120 107 109 30.4 113 178 266
Median Price (NSA, $) 195,200 215,600 212,500  -11.7 230,408 243,742 243,067
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