WASHINGTON, D.C.- Turmoil in the mortgage finance system in August led to an 8.3 percent drop in sales of new single-family homes for the month, according to figures released by the U.S. Commerce Department. The seasonally adjusted annual rate of 795,000 units was 21.2 percent below a year earlier. "As our surveys have been showing, the credit crunch continues to take a heavy toll on consumers and builders alike," said Brian Catalde, president of the National Association of Home Builders (NAHB) and a home builder from El Segundo, Calif. "Today's report shows that the supply-demand imbalance in the single-family housing market still is quite serious, and the imbalance clearly is putting downward pressure on home prices," said NAHB Chief Economist David Seiders. "NAHB's forecast shows a trough for home sales in the early part of 2008, assuming that the Fed keeps overall employment and income growth going and that order is restored to key parts of the housing finance system." "We also expect builders to strengthen price and nonprice incentives to bolster sales and limit cancellations," Seiders said. The median price of news homes sold in August was $225,700, 7.5 percent below a year earlier, the Commerce Department reported. The inventory of new homes for sale edged down 1.5 percent to 529,000 in August as builders slowed construction and worked to sell off their inventory. But the equivalent months' supply at the August sales pace increased to 8.2 months, up from 7.6 months in July, because of the slower August sales pace. Completed homes for sale were 34 percent of the inventory, while units still under construction represented almost 50 percent of the inventory and units for-sale that were permitted but not yet started represented 16 percent of the inventory level. The median length of time that completed homes were on the market was 5.9 months in August, down slightly from 6.0 months in July. Regionally, new-home sales in August were up 42.3 percent in the Northeast and 20.5 percent in the Midwest. Sales were down by 14.7 percent in the South and 20.8 percent in the West. All four regions reported a sales pace well below a year earlier.
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