New Home Sales Plunge in August

Washington, DC, September 27, 2007—New homes sales in August dropped 8.3% to an annual pace of 795,000, the lowest level in more than seven years, from a revised 867,000 rate in July, according to the Commerce Department.

The median price of new homes dropped 7.5% from August 2006, the most since 1970.

Economists forecast that sales would fall to an 825,000 pace from a previously reported 870,000 in July.

The number of homes for sale at the end of the month fell 1.5% to 529,000 in August. With sales dropping more than five times as much, the inventory of unsold homes jumped to 8.2 months at the current sales pace.

The number of properties completed and waiting to be sold rose by 2,000 to 180,000.

The decline was led by a 21% slump in the West and a 15% drop in the South. Purchases increased 42% in the Northeast and 21% in the Midwest.