US new home sales kept steady in August

There was hardly change in U.S. sales of new homes in August. The sales held steady at a seasonally adjusted annual rate of 288,000 the second lowest level amid struggling housing market after government tax breaks expired in April.


The rate of new home sales failed to make the expected rebound from July’s. One of the worst new home monthly sales since 1963 was recorded again in August.


The sales were down 28.9%, compared year-on-year period. Economists in a survey expected the August sales rate would reach 300,000.


The number of unsold new homes on the market dropped to 206,000. New home sales fell more than 30% to a record low in May after peaking at a 414,000 annual rate the preceding month.


The existing home sales hit a record low in July. July’s sales would have been the worst on record. However, in August there was an improvement in the sales with 7.6% increase to 4.13 million units. Re-sales of U.S. single-family homes and condos rebounded slightly.


The West gained 54.3%, the strongest increase in new home sales of all regions. Sales rose 16.7% in the Northeast while the South and Midwest saw decline of 10.8% and 26.1% respectively.


Tax credits which added a temporary boost to the market but ended in April might make buyers rush to complete purchases, which led to weak sales this summer.


It is considered that the continued situation of tight credit, high unemployment, and uncertainty about house prices are factors leading the low sales. Consumers are cautious for buying homes.


The construction of new homes rose 25%. The number of new-builds was still 74% below the peak in January 2006.


According to another report, orders for durable goods dropped 1.3% in August especially decline in orders of transportation equipment. The decline was lower than economists’ projection of 1.4%.


Orders for nondefense capital goods gained 4.1% while shipments of core capital goods increase 1.6%.


Ahead of U.S. new home sales data, FTSE was seen 0.3% lower after dipping 0.1% in the previous trading. Meanwhile, jobless claims data showed an increase of 12,000 in initial benefit claims and EU manufacturing was shown to have grown slowly.