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Economy in Brief

U.S. New Home Sales' Depressed Level Pulls Prices To 2003 Level
by Tom Moeller August 25, 2010

What the Federal government gives, it can take away. And the removal of the $8,000 home-buyer tax credit wreaked more havoc on home sales last month. The Census Department indicated that July new home sales fell 12.4% to 276,000, another record low, from a downwardly-revised June. Expectations were for sales of 333,000. Two months ago it was  reported that May sales had reached a record low. The decline in home sales was sharp across the country's regions but most pronounced in the Southern and Western states where sales were bottom-scrapping. These tallies began in 1963.

The decline in sales last month caused median home prices to again fall. The 4.8% y/y decline to $204,000 was to the lowest level since December 2003. The average price of a new home also fell sharply to $235,300 (-13.2% y/y), also the lowest since 2003.

At the current sales rate, the months' supply of unsold homes rose back to 9.1, nearly the highest in a year, from an upwardly revised 8.0 in June. The latest remained well below the early-2009 high of 12.1 months. The inventory of unsold homes was down 22.2% from last year and down nearly two-thirds from the 2006 peak.

The data in this report are available in Haver's USECON database

US New Homes July June May Y/Y 2009 2008 2007
Total Sales (SAAR, 000s) 276 315 281 -32.4% 372 481 769
Northeast 31 36 27 -24.4 32 35 64
Midwest 44 48 37 -21.4 54 69 118
South 157 172 153 -26.6 201 264 409
West 44 59 64 -54.6 87 113 178
Median Price (NSA, $) 204,000 217,000 227,800 -4.8% 214,500 230,408 243,742
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