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WASHINGTON: Sales of new homes in the US fell 2.3% in August. According to the National Association of Home Builders (NAHB), entry-level homes are driving the new-home market.
"The price data shows entry-level homes are generally driving the new-home market right now, and that's because first-time buyers don't have another home they have to sell," said NAHB chairman Bob Nielsen.
"The number of foreclosed homes on the market continues to pose major challenges, not just to builders who have to compete against that low-priced product, but also to buyers who need to sell an existing home before trading up to a new one," he said.
NAHB, a Washington-based trade association involved in multifamily construction and property management said the only region that reported an increase in new-home sales in August was the Midwest at 8.2%, while the Northeast, South and West posted a decrease in sales of new-homes of 13.6%, 2.4% and 6.3% respectively.
The US Commerce Department recently released data reporting that the decline was due to a seasonally adjusted annual rate of 295,000-units in August from an upwardly revised 302,000-unit rate the previous month.
"As builders in our recent surveys have been telling us, the lull in new-home sales continued even as mortgage rates held at extremely favourable levels in August. This is partly because continuing tight credit conditions are dissuading even well-qualified buyers, who are having trouble obtaining the good rates that are out there," said NAHB chief economist David Crowe.
"However, on a positive note, today's numbers confirm that builders are wisely refraining from adding to the inventory of unsold new homes, which is currently at a 49-year low."
The new homes for sale inventory fell to a new record low to 162,000 units in August. However, due to the slower sales pace, the months' supply of new homes increased slightly to 6.6%.
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