The median sales price of a new home fell to a new four-year low of $218, 400, the US Census Bureau announced today.

The value of US consumers’ homes is closely related to their wealth, consumer confidence and consumer spending. While prices continue to fall there seems to be little hope of a near-term economic recovery.

The headline New Home Sales number beat analyst expectations of 452K, coming in at 464K annualized. This represents a 2.7% increase from August’s downwardly revised 452K sales. However, sales are still 33.1% lower than at the same time last year.

Contracting prices does seem to be restoring some demand to the housing market with 7.3% shaved from the inventory of unsold homes. At the current sales pace it would take 10.4 months to clear the 349K strong inventory. This is considerable better than the 11.4 months seen in August.

Sales in the West saw the biggest increase up to 108K from 88K previous while the South climbed to 269K from 267K in August. Sales in the Mid-West and North-East contracted, down to 65K and 22K from 69K and 28K respectively. The drop of 21.4% seen in the North-East brings the region to a record low annual sales pace.

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.