The Economy

New Home Sales Fall 11.5% in September

The sharp drop in sales of newly built home suggests one segment of the market is cooling, but sales of existing homes rose 4.7%.
Katie Kuehner-HebertOctober 26, 2015
New Home Sales Fall 11.5% in September

Part of the housing sector hit a speed bump in September, with sales of new single-family homes falling sharply to a near one-year low.

The Commerce Department reported Monday that sales of newly built homes dropped to a seasonally adjusted rate of 468,000 last month, down 11.5% from August’s downwardly revised rate of 529,000.

It was the lowest level since November 2014. Economists surveyed by The Wall Street Journal had expected a figure of 555,000.

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“Americans’ zeal for newly built homes took off this year — yet now appears close to having topped out,” USA Today said, noting that higher prices and slower overall economic growth have been weighing on the housing market.

But the WSJ noted that new-home sales figures are volatile and frequently revised. So far this year, sales, not seasonally adjusted, are up 17.6% from the same period a year ago.

“The September report was a clear disappointment, but does little to alter our view that the housing market is continuing to recover,” Daniel Silver, an economist at JPMorgan Chase, said in a note to clients. “We view the new home sales data as unreliable and many other more reliable housing indicators have been sending upbeat signals lately.”

Sales of existing homes rose 4.7% in September to the second-highest pace in eight years, as continued low interest rates and pent-up demand supported the housing recovery. Existing-home sales account for about 90% of the residential real-estate market.

U.S. home building also rebounded in September after two straight months of declines, the Commerce Department said last week, largely due to a sharp increase in construction of apartments and other multifamily housing. And a gauge of home-builder sentiment rose to a 10-year high in October.

The housing sector got a boost in September when the Federal Reserve decided not to raise short-term interest rates. But according to The Journal, wage gains have been muted during the recovery, making it harder for potential buyers to save for a down payment on a home.