Sales of new homes in the United States fell in August to a 17-year low, a housing market setback suffered even before the latest turmoil in financial markets.
Sales dropped 11.5% from July, more than forecast, to an annual rate of 460,000, the least since January 1991, the Commerce Department said Thursday. The median price of a new home dropped 6.2% from a year earlier, to $221,900, the lowest since September 2004.
"Housing will continue on its downward path into 2009," Maxwell Clarke, the chief U.S. economist in the New York office of the Singapore research and consulting firm IDEAGlobal Inc., said before the report.
"We still see more foreclosures coming into the market. Tighter credit makes it that much more difficult for people to buy," Mr. Clarke said.
The median of estimates in a Bloomberg survey of 75 economists had forecast new-home sales at a 510,000 annual pace. Their estimates ranged from 493,000 to 555,000.
July sales were revised up to a 520,000 pace from a previously estimated 515,000.
Sales of new homes were down 35% from August 2007, the Commerce report showed.
The number of homes for sale fell to a four-year low of 408,000, down 4.4% from the previous month. The decline was the biggest since 1963.
Still, the supply of homes at the current sales rate rose to 10.9 months' worth, from 10.3 months.
Though they account for only about 10% of the housing market, new-home purchases are considered a timelier indicator because they are based on contract signings.
Sales of previously owned homes, which make up the remainder, are compiled from closings and reflect contracts signed weeks or months earlier.
Resales decreased 2.2% in August, to an annual pace of 4.91 million units, and the median price for existing homes fell 9.5% from a year earlier, a record decline, the National Association of Realtors said Wednesday.
Inventories of new properties have fallen since July 2006 as builders scaled back.
Ground was broken in August on the fewest new houses in 17 years, and permits, a sign of future construction, also fell, Commerce Department figures showed last week.
New-home sales dropped in three of four regions, led by a 36% slump in the West and a 32% decline in the Northeast.
Purchases rose 7.2% in the Midwest, Thursday's report showed.
Lennar Corp., the second-largest U.S. home builder, this week reported its sixth straight quarterly loss.
The Miami home builder said the federal government must act to boost home prices that have fallen nearly one-fifth from their 2006 peaks.
"Consensus is building that falling home prices are not only detrimental to the economy at large but" also must be stabilized "in order to repair our failing financial system," said Stuart Miller, Lennar's president and chief executive.