The Commerce Department has reported a sharp decline in U.S. new home sales for August, following a significant increase in the previous month. According to the report released on Wednesday, new home sales fell by 4.7 percent to an annual rate of 716,000 in August, after experiencing a 10.3 percent surge to a revised rate of 751,000 in July.
Economists had forecasted a drop of 5.3 percent, anticipating sales to reduce to a rate of 700,000 from the initially reported 739,000 for July. The revised July rate stands as the highest since new home sales reached an annual rate of 781,000 in February 2022.
The data revealed considerable decreases in new home sales in the Northeast and West, which saw declines of 27.3 percent and 17.8 percent, respectively. Sales in the Midwest also decreased by 5.8 percent, while the South observed an increase of 2.7 percent.
Additionally, the Commerce Department noted that the median sales price of new homes sold in August was $420,600, reflecting a 2.0 percent drop from $429,000 in July and a 4.6 percent decrease from $440,900 a year prior.
The inventory of new homes for sale at the end of August was estimated at 467,000, which corresponds to 7.8 months of supply at the current sales pace. This is higher than the 7.3 months recorded in July but slightly lower than the 7.9 months of supply in August 2022.
Meanwhile, a separate report from the National Association of Realtors (NAR) indicated a notable decline in U.S. existing home sales for August. The NAR reported a 2.5 percent drop to an annual rate of 3.86 million, following a 1.3 percent increase to a rate of 3.95 million in July. Economists had predicted a smaller decline of 1.3 percent, expecting sales to fall to a rate of 3.90 million. This larger-than-expected decrease has brought existing home sales to their lowest level since hitting an annual rate of 3.85 million last October.