New Data Show Home Sales Rose in August

All the news surrounding the Florida housing market this week isn’t dire. Sales of new homes posted the biggest increase in five months in August, raising hopes that the steep slide in the industry may be leveling off, or at least not as severe as some have predicted.

Sales of new single-family homes increased by 4.1 percent last month to an annual rate of 1.05 million units, the U.S. Commerce Department reported today. It was the biggest increase since an 8 percent gain in March.

The August rise followed a 7.5 percent plunge in sales in July, which had registered the third straight decline. Numbers for markets in Southwest Florda — as well as the rest of the state — will be available from the Florida Assoiciation of Realtors (FAR) later today.

The gain was far better than the 3 percent decline economists had been expecting and could signal that housing is beginning to level off after a steep slide. However, home prices of units sold in August fell to $237,000 ($186,850), down 1.3 percent from August 2005. It was the biggest year-over-year price decline in more than three years.

From 2001-2005, housing enjoyed five consecutive years of record sales, propelled by the lowest Florida mortgage rates in four decades.

This year, however, has been a dramatically different story. Sales have been falling as Florida mortgage loan costs have crept steadily upward. The drop in sales and construction of homes has been so sharp that some experts worry it could plunge the country into a recession.

But other analysts argue that recent declines in home loan rates should help put a floor on the housing decline. The severity of the market’s landing remains to be seen.

The increase in sales contrasted with prior reports showing existing home sales falling in the month of August, marking a fifth straight month of decline. Construction of new homes and apartments dropped by a sharp 6 percent last month.

Sales of new homes were up in every region of the U.S., except the West, where they dropped a sharp 17.7 percent. Sales rose 21.7 percent in the Northeast, 12.2 percent in the Midwest and 11.1 percent in the South.