New Home Sales Were Little Changed in September
Purchases of new houses in the U.S. rose in September, and revisions showed the magnitude of the unfolding recovery was more modest.
Sales increased 0.2% to a 467,000 annualized pace, in line with the median forecast of economists surveyed by Bloomberg, Commerce Department data showed Oct. 24. The August rate of 466,000 was 7.5% weaker than previously estimated, and data for the prior two months also were revised down.
Home sales are struggling to accelerate as Americans find mortgages difficult to obtain and wage gains barely keep pace with inflation. The recent drop in borrowing costs will probably help prop up the residential real estate market heading into 2015, which will give the world’s largest economy a lift.
“This was going to be a very lengthy recovery for the housing sector, and we still have a long way to go,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida, the second-most accurate new-home sales forecaster over the past two years, according to data compiled by Bloomberg. “The low mortgage rates are very helpful. The job growth is very, very helpful. But we’re still seeing relatively tight mortgage credit and relatively weak growth in average wages.”
The median forecast of 75 economists surveyed by Bloomberg called for the pace of U.S. new-home sales to decelerate to 470,000 in September from the previously reported 504,000 rate the prior month. Estimates in the Bloomberg survey ranged from 433,000 to 513,000.
The rate of purchases last month represented a new six-year high only because of the big August revision.
The median sales price of a new house dropped 4% last month from September 2013 to $259,000, the Oct. 24 report showed. That was the first decrease since April and the largest since January 2012.
Regionally, demand improved in the South and Midwest, was little changed in the Northeast and dropped in the West.
The supply of homes at the current sales pace was little changed at 5.3 months in September. There were 207,000 new houses on the market at the end of the month, the most since July 2010.
