Sales of new U.S. homes slumped 3.4 percent in August, the second straight monthly decline.
The Commerce Department said Tuesday that sales dropped to a seasonally adjusted annual rate of 560,000. This followed a 5.5 percent decline in July. Still, sales gains earlier this year mean that sales are running 7.5 percent higher year-to-date than in 2016.
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Sales could worsen in coming months as parts of Texas and Florida — both hit by Hurricanes Harvey and Irma — find that new construction gets delayed as the focus turns to rebuilding properties that were flooded or damaged by the fierce winds and rainstorms.
But August's drop in new home sales also points to the limits of the rebound from the Great Recession and the housing bust that triggered the downturn a decade ago. Home values have climbed at a much faster pace than incomes, meaning that many buyers had to strain their budgets to purchase a house. Low mortgage rates reduced the financial crunch somewhat, but then sales listings began to dwindle and many would-be buyers have found themselves outbid on existing homes and priced out of new housing developments.
A shortage of homes for sale coupled with rising prices has turned affordability into a challenge for many would-be buyers. Fewer new homes priced below $200,000 are coming onto the market. New homes at these relatively affordable prices were 14 percent of sales in August, down from 17 percent in 2016 and 19 percent in 2015.
The median sales price increased 3.7 percent in the past 12 months to $368,100
New-home sales in August fell in the Northeast, South and West, while staying unchanged in the Midwest.
The sales decline over the past two months was so significant that the months' supply of new houses on the market ballooned to 6.1 months. That figure had been hovering around 5.3 months in June — raising a question of whether builders will wait to sell off some of their inventory before breaking ground on more new houses.
The pace of new-home construction dropped 0.8 percent in August, but that was largely because of fewer apartment buildings being started.