New-Home Sales Down In August Following Record July Surge

September 27, 2005

Sales of new single-family homes dropped to a seasonally adjusted annual rate of 1.237 million units in August following a record buying surge the month before, the U.S. Commerce Department reported today. Despite a 9.9 percent decline from July’s record pace, the August sales rate was 6.2 percent above a year ago and actual sales-to-date were a healthy 7.4 percent higher than at this point last year.

"Home builders continue to see solid demand for new homes," said David Wilson president of the National Association of Home Builders (NAHB) and a custom home builder from Ketchum, Idaho. "Our Housing Market Index survey of builders held in a positive range through August as builders reported near-record levels of home sales and maintained a positive view of future sales as well."

"The Commerce Department’s estimates of new home sales are subject to a high degree of sampling variability, particularly at the regional level," said NAHB Chief Economist David Seiders. "It’s likely that the July report overstated the strength of sales and that the August report exaggerated the decline. The average for the July-August period is quite close to the second quarter average, and it appears that home sales are plateauing around near-record levels."

All four regions across the country posted decreased sales in August, with two regions, the Northeast and the West, experiencing the most flux during the past two months. Sales in the Northeast were down 22.0 percent, following a 13.6 jump the month before while the West dipped 17.9 percent following an almost 23 percent surge in July. Sales in the South were down 2.2 percent and Midwest dropped 10.6 percent for the month.

The inventory of new homes for sale was 480,000 at the end of August, a 4.7 months’ supply at the current sales pace, although 22 percent of the for-sale units were not yet started ? a historically high share. Completed homes represented only 22 percent of the inventory, and units still under construction were 57 percent of the total.

Source: NAHB


Contact ALTA at 202-296-3671 or communications@alta.org.

SoftPro is the nation's leading provider of closing and title software, consistently pushing the technological envelope to pioneer the most powerful and comprehensive closing and title automation software on the market. SoftPro's Award-Winning Software combines cutting-edge technology with outstanding support to make your business more productive, efficient and boost your revenue. North American Title Insurance Company (NATIC) is a seasoned title insurance underwriter, helping title agents to achieve their individual business goals for more than 50 years. Today, the company conducts real estate settlement services in 39 states and the District of Columbia through a network of experienced, independent agents.