New Home Sales Dip in August

New home sales declined slightly in August, though median prices surged. National Association of Home Builders statistics show that each new home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, underscoring the need for a true and lasting housing recovery.

New home sales fell slightly in August and median home prices surged, as supplies of new homes remained low.

The rate of new homes sold declined 0.3 percent from July to August, to a seasonally adjusted annual rate of 373,000, according to the Commerce Department. July's rate was revised to 374,000, the highest since April 2010, when federal tax credits were inflating sales.

Year-over-year sales in August were up 27.7 percent, continuing a strong year-over-year trend that has indicated a recovering housing market – though economists say healthy market levels would be closer to 700,000, far below current sales.

Median new home prices are the biggest story in the monthly numbers, jumping 11.2 percent to $256,900 in August, the biggest one-month gain on record. Sales prices were up 17 percent compared to August 2011, the highest level since new homes averaged a $262,600 price tag in March 2007, when prices were on the decline following the housing boom.

Previously occupied home sales also jumped in August, reaching the highest level since May 2010. Homebuilder confidence is at a six-year high, according to a National Association of Home Builders survey, and construction of single-family homes rose last month to the fastest annual rate in more than two years.

Despite these gains, home sales and construction remain far below healthy levels. The most recent home price index from Standard & Poor's/Case Shiller showed home prices only increased 1.2 percent in July compared to the previous year. That marked the second consecutive year-over-year price gain after two years, when prices fell every month compared to the same month in the year prior.