New-Home Sales Decline 9.9% in August

(September 28, 2005) -- Sales of new homes fell a surprising 9.9 percent in August to a seasonally adjusted annual rate of 1.24 million units, marking the largest decline since a 10-percent plunge in November 2004.

The August decline, reported by the U.S. Commerce Department, was more than double what analysts had been expecting. It also shows the median home sales price jumped 2.5 percent from the previous month to $220,300—sending a mixed signal on whether the housing market is slowing.

Earlier this week the NATIONAL ASSOCIATION OF REALTORS® reported that housing resale activity rose 2 percent last month to 7.29 million units, which is the second-highest rate on record.

Rising mortgage rates finally may be affecting the housing market, according to some economists. Nonetheless, they still expect 2005 to be the fifth consecutive year in which a record number of new and previously owned homes are sold.

Source: Washington Post (09/28/05); Crutsinger, Martin

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