The Commerce Department announced Thursday new-home sales decreased 8.3% in August, dropping the seasonally adjusted annual rate to 795,000, the lowest in seven years. Economists expected the annual rate to come in at 825,000 homes. "This is more evidence that it's going to be a long and -- for a lot of people -- a painful process," said Mike Schenk, economist at the Credit Union National Association. "The soft housing market will be with us for a long time, at least 18 months." The inventory of unsold homes fell 1.5% to 529,000, of which 180,000 are completed. Thirty four percent of all homes on the market are now completed, a new high for this cycle, which will likely put further pressure on homebuilders to cut prices and introduce even larger incentives. The median price for a new home decreased 7.5% to $225,700 compared to $243,900 a year ago, while the average price dropped 8% from $317,300 down to $292,000. KB Home reported Thursday it lost $478.6M during the last quarter, and said its average selling price dropped 7% (full story). Ian Shepherdson, chief U.S. economist for High Frequency Economics, called the numbers "hideous."
Sources: Press release, MarketWatch, WSJ
Commentary: KB Home Swings to Loss; 'No Sign of Housing Stabilizing' • Pre-Market Economic News Round-Up
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