New home sales dip, but prices scale 5-year high
WASHINGTON (Reuters) - New U.S. single-family home sales held near two-year highs in August and prices vaulted to their highest level in more than five years, adding to signs of a broadening housing market recovery.
The Commerce Department said on Wednesday sales slipped 0.3 percent to a seasonally adjusted 373,000-unit annual rate. July's sales pace was revised up to a 374,000-unit pace, the highest level since April 2010, from the previously reported 372,000 units.
Economists polled by Reuters had forecast sales at a 380,000-unit rate last month. Compared to August last year, new home sales were up 27.7 percent.
Last month, the median price of a new home increased a record 11.2 percent to $256,900 -- the highest level since March 2007. Compared to August last year, the median sales price jumped 17 percent, the largest rise since December 2004.
"The drum beats louder ... more evidence that a recovery in U.S. housing is taking root," said Robert Kavcic, an economist at BMO Capital Markets in Toronto.
U.S. financial markets were little moved by the data, with stocks holding steady at lower levels. Treasury debt prices maintained earlier gains and the dollar held firm against the euro.
Despite the month-on-month dip in sales, the report was consistent with other data that have suggested a turn-around in the housing market after collapsing in 2006 and igniting the 2007-09 recession.
Home resales surged last month and homebuilder sentiment jumped to a six-year high in September. Home prices in 20 major metropolitan areas rose in July for a sixth straight month, recent reports showed.
However, the housing market recovery lacks sufficient strength to take the baton from the faltering manufacturing sector as the main driver of the economic recovery.
The Federal Reserve moved this month to bolster the economy, announcing it would buy $40 billion in mortgage-backed securities per month until the outlook for employment improved significantly.
Those measures have pushed mortgage rates to record lows, causing an increase in demand for loans to purchase homes, a second report showed.
The Mortgage Bankers Association said its mortgage purchase index rose 0.7 percent last week after declining 3.8 percent the previous week. Fixed 30-year mortgage rates dropped 9 basis points to an all-time average low of 3.63 percent last week.
The inventory of new homes on the market held near record lows last month. At August's sales pace it would take 4.5 months to clear the houses on the market, unchanged from July.
New home sales were up in three of the four regions, surging 20 percent to a near two-year high in the Northeast. Sales in the South fell 4.9 percent.
(Editing by Andrea Ricci)