New Home Sales Strong

Don Hogsett, October 4, 2004

Sales of costly new homes shot up faster than expected during August, jumping 9.4 percent, but otherwise the housing market turned in a more muted performance, with housing starts largely unchanged, and sales of existing homes falling 2.7 percent.

The U.S. Commerce Department reported that new home sales moved at a seasonally adjusted level of 1.18 million units, up from 1.08 million in July, and ahead of a forecasted sales pace of 1.15 million.

The sales picture for new homes was broadly strong, with gains reported in three of the nation's four regions: up 19.5 percent in the West; up 12.6 percent in the South; and up 6.1 percent in the Northeast. The only decline, 8.3 percent, was recorded in the Midwest.

New home sales aside, the picture was mixed. Sales of existing homes, by far the largest chunk of the U.S. housing market, slipped 2.7 percent, to a seasonally adjusted rate of 6.5 million units, down from a pace of 6.7 million units in July, the National Association of Realtors reported. It was a second straight monthly decline for resales, and over the past two months, sales have now dropped 5.5 percent.

Even after the drop, sales are near historic highs, and are still 9 percent higher than their pace of 6 million units recorded in January.

Housing starts, a gauge of future sales, were relatively flat, edging ahead just 0.6 percent. Starts of single-family homes moved up at a pace of 0.4 percent. Looking even further out, privately-owned housing units authorized by building permits fell 5.5 percent.

Month-To-Month % Change

Source: U.S. Department of Commerce and National Association of Realtors
Northeast 0.0% 6.5% 6.1%
Midwest -4.3 4.8 -8.3
South -2.9 1.0 12.6
West -1.6 -4.7 19.5

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