New Home Sales In The Crapper

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New home sales have hit a 7 year low. That’s the bad news. The good news is that the economy has grown at the fastest rate in years, despite the slump in the housing market.

Sales of new homes dropped by 8.3 percent in August from July, the Commerce Department reported Thursday, driving down sales to a seasonally adjusted annual rate of 795,000 units. That was the lowest level since June 2000, when sales clocked in at a pace of 793,000.

The home sales report came on the same day that the government reported a relatively brisk business growth rate in revised figures for the second quarter. But the 3.8 percent GDP figure was less than first estimated and it occurred before the credit crisis and its repercussions across the broad spectrum of the economy had taken hold.

Expect the market to be confused about this news. The more you look for signs from the economy about which direction things are headed, the more muddled they appear to be.

But one thing is certain: people sure aren’t buying houses the way they used to.

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