US new home sales sank in August

US new home sales slowed sharply for the second straight month in August, relieving some pressure on a tight market, the Commerce Department reported Wednesday.

The decline brought the sales rate to its lowest level in since December while prices fell and inventories rose.

Sales fell 3.4 percent from July to an annual rate of 560,000, seasonally adjusted, surprising analysts who forecast a decline of only 0.5 percent.

And the sales pace was 1.2 percent below the rate in August 2016.

Meanwhile, July's numbers were revised upwards slightly, somewhat muting the drop from June to 5.5 percent.

Officials said Hurricane Harvey, which made landfall in southeast Texas late last month, slowed the flow of data from some disaster stricken areas but its precise effect on the numbers was not immediately clear.

At the current sales rate, the volume of homes for sale represented a supply of 6.1 months, up seven percent from July and the highest level in three years.

Meanwhile, the median home price fell 6.2 percent for the month to $298,000.

Sales fell sharply in the US South, dropping 4.7 percent, and in the West and Northeast, declining by 2.7 percent and 2.6 percent, respectively.

Though they can see big swings from month to month, August's sales numbers could mean pressure is momentarily easing on would-be homebuyers.

But analysts say the current economic recovery, with steady job creation and slowly rising wages, has created strong demand for housing and this trend is likely to continue.

Impediments to construction, including scarce labor and rising costs for materials, have meant that supply has not kept pace with demand.

Mickey Levy of Berenberg Capital Markets said the hurricanes' destruction came at a moment when barriers to homebuilding already were stifling supply levels.

"The necessary rebuilding in the South will strain a housing sector already constrained by various supply factors," he said in a note to clients, highlighting in particular workers shortages.

"Builders will have difficulty finding skilled construction workers that are in short supply -- residential construction employment is just touching 2002 levels, as employment in other sectors have long-passed 2002-07 levels."