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New Home Sales Recover From July Plunge

Builders lowered prices and buyers responded in August, pushing new home sales up 7.9 percent to an annual pace of 421,000 and reversing almost half of July's 64,000 drop in sales, the ""Census Bureau and HUD"":http://www.census.gov/construction/nrs/pdf/newressales_201308.pdf reported Wednesday.

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Economists surveyed by _Bloomberg_ expected June sales to rise to 425,000 from July's originally reported 394,000. July sales were revised to 390,000.

The median price of a new home, according to the Census/HUD report, slipped 0.7 percent--$1,700--in August to $254,600. July's median price was revised to $256,300 from the originally reported $257,200.

The number of new homes for sale rose to 175,000 in August--the highest level since March 2011--but the months' supply fell to 5.0 from 5.2 in July.

The sales pace for May, June, and July were revised down an average of 5,000 per month, exaggerating August├â┬ó├óÔÇÜ┬¼├óÔÇ×┬ós 31,000 improvement. The month-over-month increase in the sales rate was the largest since January, when the sales pace rose 62,000.

The report came on the heels of a report last week by the National Association of Home Builders that builder confidence was flat in September--the first time in five months the Housing Market Index, which measures confidence, has not increased.

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Confidence stalled largely on a drop in the outlook for sales six months out; buyer traffic to model homes increased. The index had improved 32 percent from April through August, registering above 50 (on a 100 point scale), which is considered a positive reading. The index had been below 50 for 85 straight months--more than seven years--from April 2006 until this May.

The median price of a new single family home, according to the Census/HUD report, has fallen for four straight months since peaking at $279,300 in April. The average price increased for the second month in a row, up $400 in August to $318,900 after jumping $18,000 in July.

The report for August showed a slight shift away from higher-priced homes as houses priced at $500,000 or more accounted for 9 percent of August sales, down from 12 percent in July. Homes priced at $300,000 or less represented 63 percent of all August sales, unchanged from July.

The new home sales report tracks contracts for sale--not closings--and as such is comparable to the Pending Home Sales Index (PHSI) compiled by the National Association of Realtors. NAR will release its August PHSI Thursday.

According to a separate Census/HUD report, builders completed new homes at a seasonally adjusted annual rate of 573,000 in August, 152,000 higher than the sales rate, adding to inventories.

Regionally, sales fell month-over-month in three of the four Census regions in August, dropping only in the West to a rate of 82,000 from 96,000 in July.
The sales pace rose to 241,000 in the South in August from 209,000 in July. In the Midwest the sales rate was 61,000 in August, up from 51,000 in July, and in the Northeast, the sales pace was 37,000 in August compared with 34,000 in July.

_Hear Mark Lieberman every Friday on P.O.T.U.S. radio, Sirius-XM 124, at 6:20 a.m. Eastern and follow him on Twitter at @foxeconomics._

About Author: Mark Lieberman

Mark Lieberman is the former Senior Economist at Fox Business Network. He is now Managing Director and Senior Economist at Economics Analytics Research. He can be heard each Friday on The Morning Briefing on POTUS on Sirius-XM Radio 124.
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