US New Home Sales Lowest Since 1991 - Prices Hit 4-Year Low

The sale of new homes in the US hit a 17-year low in August despite the lowest prices in 4 years, the US Census Bureau announced today.

Seasonally adjusted, New Home Sales fell by 11.5% to an annualized rate of 460K in August. This is the lowest figure seen since January 1991. It had been expected that sales would fall but by a much more modest pace; economists had expected a number in the region of 510K.

Worryingly, the fall in sales was actually accompanied by a fall in the median price of a new home. Prices fell by 6.2% from a year ago to $221, 900, which is the lowest level seen since September 2004.

The average price of new homes was also down. It now stands at $263, 900, down by 12.4% over the year, 11.8% on the month.

Inventories in the month of August were down to 408K, the lowest level since August 2004. This number reflects a 10.9-month supply at the current sales rate. Fewer homes for sale may seem like a positive factor until you combine this with a decreasing number of sales. The lack of demand in the market place is leading to a reduction of new homes under construction with only 11K in August, the lowest since December last year.

Regionally the West has been the worst performer. Sales have decreased by a massive 36.1% on the month to 78K. This is the lowest figure since April 1982. On the year sales in the West have fallen by a massive 50%, a decline not seen since September 1981.