US new-home sale drop, but prices reach 5-year high

Sales of new U.S. single-family homes fell slightly in August but held near two-year highs, while the median price of homes sold rose by a record amount to its highest level in more than five years, the government reported Wednesday, adding to signs of a broadening housing-market recovery. The Commerce Department said new-home sales fell 0.3 percent last month to a 373,000-unit annual rate. July’s 374,000 sales pace was the highest level since April 2010. Compared to August 2011, new-home sales were up 27.7 percent, but remain far below the annual pace of 700,000 that economists consider healthy. The median price of a new home jumped 11.2 percent in August, the biggest one-month gain on record and the highest level since March 2007. Compared to a year ago, the median sales price jumped 17 percent, the largest year-over-year gain since late 2004. Despite the slight decline from July’s sales pace, the August report was consistent with other data that have suggested a rebound in the housing market after it collapsed in 2006, igniting the 2007-2009 recession. Home re-sales surged last month, homebuilder sentient jumped to a six-year high in September, and construction of single-family homes rose last month to the fastest annual rate in more than two years. Despite the gains, however, home sales and construction remain well below healthy levels, and the housing market is not strong enough to replace the slowing manufacturing sector as the main driver of growth.