WASHINGTON—U.S. new-home sales continued to fall in August, and the supply of available homes expanded.

Purchases of newly built single-family homes fell 3.4% to a seasonally adjusted annual rate of 560,000 in August, the Commerce Department said, the second straight monthly decline and hitting their lowest level since December. That was below the 591,000 sales pace that economists surveyed by The Wall Street Journal had expected.

More broadly, new-home sales were up 7.5% in the first eight months of 2017 compared with a year earlier.
Supply levels continued to rise in August. At the current sales pace, there were 6.1 months of new homes on the market at the end of the month, a figure that has crept up in recent months and in August hit its highest level since July 2014.

The median sale price for a new home sold in August was $300,200.

The Commerce Department also said it corrected price data for new-home sales going back nearly three years, covering October 2014 through January 2017, to include previously omitted response data. Monthly median and average home prices were revised down by about 1.2% on average.

The agency said survey responses were lower than usual in areas of Texas and Florida affected by Hurricanes Harvey and Irma, potentially affecting the latest data.

Other recent housing and construction readings have offered a mixed picture of a market with too few single-family homes and too many apartments in some areas. Sales of previously owned homes, which account for the bulk of U.S. homebuying activity, fell in August to the lowest level in a year because the limited supply of homes has driven up prices, squeezing many would-be buyers. Overall housing starts slipped 0.8% in August from the month prior, driven by continued steep declines in multifamily building.