U.S. new home sales drop to 7-year low

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    New home sales in the United States dropped by 8.3 percent in August to a seasonally adjusted annual rate of 795,000 units, the lowest level in seven years, the Commerce Department said Thursday.
    The reading for new home sales defied analysts who were expecting an annual rate of 825,000 units for August.
    Meanwhile, new home sales in July were revised downward to 867,000 units from 870,000 previously estimated.
    Compared to the same month of last year, new home sales in August was down 21.2 percent.
    As sales declined, the median sales price, a typical market price where half of new homes are sold for more and half for less, also fell to 225,700 dollars in August. That was 8.3 percent below the previous month level and the lowest point since January 2005.
    The August showing of new home sales was seen as a sign of the continued weakness troubles in the once-sizzling U.S. housing market, which has cooled off significantly since last year.
    The slump in the housing sector, the worst in 16 years, is expected by economists to continue amid a widening credit crisis stemming from troubles in the U.S. subprime mortgage market, where loans are given to homebuyers with weak credit histories.
    For August, however, the inventory of unsold new homes on the market decreased by 1.5 percent to 529,000 units.
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