Northwest Arkansas Democrat-Gazette
U.S. new-home sales slide 0.7%
Median price in September falls to $299,400, down 7.9%
WASHINGTON — Sales of new U.S. homes fell in September and prices continued their downward trend, suggesting the momentum in the sector may be slowing despite low mortgage rates and steady wage gains.
The Commerce Department reported Thursday that sales of new homes fell 0.7% last month after a 6.2% surge in sales in August. Homes were sold at a seasonally adjusted annual rate of 701,000, 15.5% higher than a year ago.
Recent data has been mixed. Existing-home sales dropped in September to the slowest pace in three months, while single-family housing starts accelerated for a fourth month. Homebuilder sentiment has risen this month to the highest since early 2018.
Many economists had expected new-home sales to keep rising in September, reflecting declining mortgage rates and ultra-low unemployment.
However, the housing industry is combating various factors that are holding back growth ranging from a shortage of construction workers to a lack of available land for new homes.
The median price of a new home fell 7.9% last month to $299,400, down from an August price of $325,200.
The only region to post a sales gain was the Midwest, where sales rose 6.3%. Sales in the West fell 3.8% and were down 2.8% in the Northeast and a slight 0.2% in the South.
The National Association
of Realtors reported Wednesday that sales of previously owned homes, the biggest part of the market, fell 2.2% in September with rising prices and lower inventories blamed for the decline.
Homeowners in both the existing-sales market and the new market have had to face a shortage of available properties this year, especially at the lower-priced end of the market.
The inventory of new
homes for sale fell 0.6%in September to 321,000, or a 5.5-months supply at the September sales pace.
Despite the sales drop, the latest figures show the sector remains on broadly solid footing as higher wages and lower borrowing costs have offset some of the affordability challenges from lean supply. Still, the signs of cooling follow six straight quarters in which housing weighed on the economic expansion.
Economists in Bloomberg’s survey projected a pullback to a 702,000 annualized pace for September sales. Estimates ranged from 670,000 to 735,000.
New-home purchases account for about 10% of the market and are calculated when contracts are signed. They are considered a timelier barometer than purchases of existing homes, which are calculated when contracts close. The figures tend to be volatile.
In a separate report Thursday, long-term mortgage rates rose slightly this week to their highest point in 12 weeks, though they remain far below their levels of a year ago.
Mortgage giant Freddie Mac — the Federal Home Loan Mortgage Corp. — said the average rate for a 30-year fixed mortgage rose to 3.75% from 3.69% the previous week.
That’s down from 4.9% at the same time last year and by historic standards is very low.
The average rate on a 15-year mortgage moved up to 3.18% from 3.15% a week ago.
Freddie Mac surveys lenders across the country between Monday and Wednesday each week to compile its mortgage rate figures.
The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates.
The average fee on 30-year fixed-rate mortgages was 0.5 point, while the average fee for the 15-year mortgage was also 0.5 point.
The average rate for fiveyear adjustable-rate mortgages rose to 3.4% from 3.15% last week, while the fee was 0.3 point.