New home sales plunge 11.5% in August
* Sales collapsed 11.5% to a seasonally adjusted annual rate of 460,000 in August. That was much worse than the average forecast, which called for a 1% decline to 510,000 units. Sales were down 34.5% from the year-earlier 702,000.
* Regionally, sales plunged 31.9% in the Northeast and 36.1% in the West. Sales fell 2.1% in the South, but climbed 7.2% in the Midwest.
* The supply of homes for sale continues to decline -- by 4.4% to 408,000 units in August from 427,000 in July. However, on a months supply at current sales pace basis, inventory rose to 10.9 months from 10.3 months in July. The cycle high was 11.2 months in March.
* Median home prices fell 5.5% to $221,900 in August from $234,900 in July. They fell 6.2% from a year earlier.
New housing sales took a header in August as mortgage market tightness and economic weakness hit home. We haven't seen sales this low since January 1991. Exclude that one month and you'd have to go all the way back to August 1982 to find a worse month for the new home market.
The "good" news, if there is any here, is that the supply of homes for sale continues to fall. We have seen builders cut back aggressively on construction plans and activity, and that will eventually restore some balance to the supply/demand equation. Unfortunately, the existing home market is still larded up with inventory. So the housing market overall will likely continue to struggle, with prices under pressure through 2009.