WASHINGTON - New home sales increased 0.7% in August as the inventories and the median new home prices dropped to their lowest levels in almost six years, the Commerce Department reported today.
Buyers purchased 429,000 new homes in August following a downwardly revised 426,000 sales in July. Sales in July were initially reported at 433,000.
Economists polled by Thomson Reuters expected 440,000 new home sales in August, according to the median estimate.
The number of homes for sale declined to 262,000, the lowest level since November 1992. The supply of new homes at the current sales rate fell to 7.3months.
New home inventories dropped as first time homebuyers took advantage of a federal tax credit worth up to $8,000. More than 1.4 million homebuyers have taken advantage of the tax credit, the Internal Revenue Service said on Sept. 17.
Despite declining inventories, new home prices dropped steeply in August. The median new home price was $195,200 in August, the lowest median price since October 2003. The median price declined by a record 9.5% from July and was 11.7% lower than a year ago.
Existing sales dropped 2.7% in August, the National Association of Realtors reported Thursday.
