New home sales fall in August

Numbers hit lowest level since June 2000By JEANNINE AVERSA, Associated Press Read Comments-->09/28/2007 -->
WASHINGTON -- New-homes sales tumbled in August to the lowest level in seven years, a stark sign that the credit crunch is aggravating an already painful housing slump.
Sales of new homes dropped by 8.3 percent in August from July, the Commerce Department reported Thursday, driving down sales to a seasonally adjusted annual rate of 795,000 units. That was the lowest level since June 2000, when sales clocked in at a pace of 793,000.
The home sales report came on the same day that the government reported a relatively brisk business growth rate in revised figures for the second quarter. But the 3.8 percent pace was less than previously estimated and it occurred before the credit crisis and its repercussions across the broad spectrum of the economy had taken hold.
The median sales price in August fell by 7.5 percent from a year earlier to $225,700. That was the biggest drop in percentage terms in nearly 37 years. The median price is the middle point at which half sell for more and half for less. The average sales price dropped by 8 percent in August from a year earlier to $292,000. That was the biggest decline in 17 years.
Sales fell in the South and the West in August compared with July. Sales, however, rose in the Northeast and Midwest.
The Commerce Department does not break down new homes sales by state.
The new-homes sales report, combined with other recent economic reports showing a sharp drop in demand for big-ticket manufactured goods in August, suggested the economy lost momentum as it headed into the fall.
On Wall Street, investors looked to the weak home sales report as justification for another rate cut by the Federal Reserve. The Dow Jones industrial average was up around 20 points in morning trading.
Another report issued by Commerce showed the economy staged a rebound in the spring before a credit crisis raised new fears about longer-term business health.
The economy's 3.8 percent growth rate in the April-to-June quarter was the strongest showing in just over a year.