In an earlier summary of this morning's economic news, my colleague Beth Gaston Moon noted that new home sales would be reported at 10:00 a.m. Well, the report came in, so let's take a look at the numbers. During August, sales of new homes dropped 8.3% to a seasonally adjusted annual rate of 705,000, the slowest sales pace since June 2000. New-home sales have dropped a massive 21.2% in the past year, and show little sign of having bottomed. In fact, Ian Shepherdson from High Frequency Economics told MarketWatch, this is just hideous. The sales pace for the month came in weaker than the 825,000 expected. Moreover, May, June, and July's sales were all revised lower.
According to the report, the median sales price dropped to $225,700, which is a drop of 7.5% and is the largest year-over-year decline in 37 years. This price can be affected by the mix of homes sold between and within regions, and it does not include nonmonetary incentives. The inventory of unsold homes dropped 1.5%, falling to 529,000. This decline was the fifth straight as builders continue to struggle to bring their inventories down. The current supply of unsold homes would last 8.2 months at the August sales pace. Finally, the number of completed homes that have not been sold increased 1.1% to 180,000. The monthly increase was the first since May. Checking in on the ISE Homebuilders Index (RUF), I am actually a bit surprised to see it slightly higher. The RUF has been a consistent laggard on our list of sectors tracked in Schaeffer's Daily Bulletin.