Sales of new homes in the US have reached a six-month low, as even the largest price drops in two years failed to entice buyers away from distressed properties.
Sales fell by 2.3% to an annual rate of 295,000, and the median price dropped by 7.7% compared to August 2010. Developers are fighting limited access to credit and rising unemployment figures in addition to low foreclosure prices, and it seems likely that the building industry will not see a recovery in the short term.
The median sales price declined from $226,600 in August 2010 to $209,100 in August 2011, and purchases fell in three out of four US regions, with the North East registering a 14% drop. Sales in the Midwest rose by 8.2%. The supply of homes also increased to 6.6 months, up from 6.5 months in July.
In contrast sales of previously owned homes increased by 7.7% in August to reach a five-month high of 5.03 million annually, although the median price dropped by 5.1% compared to August 2010. Nearly a third of the properties were bought for cash while another third were made up of foreclosures and short sales.
Last week the Federal Reserve announced additional measures to increase growth and stimulate the property market, as it has been instrumental in every economic recovery since 1982 barring the current one. New housing starts fell to their lowest annual rate in three months in August, and the property market is still likely to be constrained by the current economic outlook and continuing weakness in the labour markets.
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