The median sales price of a new home fell 9.7% in the 12 months ending in September, the fastest price decline in nearly 36 years, the government said Thursday. The government reported that sales of new homes unexpectedly rose 5.3% in September to a seasonally adjusted annual rate of 1.075 million, the most in three months and well above the 1.05 million expected by economists. New-home sales are down 14.2% in the past year. Inventories of unsold homes fell 1.9% to 557,000, representing a 6.4-month supply at the September sales pace. It’s the second consecutive decline in inventories. The inventory peaked at 7.2 months in July. Inventories are up 14.4% in the past year.
New-home sales in the U.S. unexpectedly rose for a second month in September as prices declined by the most since 1970.
Purchases increased 5.3 percent to an annual pace of 1.075 million during the month from a 1.021 million rate in August, the Commerce Department said today in Washington. The median price of a new home dropped 9.7 percent from a year earlier.
The reports suggests that builder incentives, lower mortgage rates, and falling prices will keep this year’s housing slowdown from deepening. It also signals the Federal Reserve, which kept interest rates unchanged for a third month yesterday, is successfully managing an economic slowdown that it hopes will stifle inflation.
“It does appear that the housing market is not freefalling,” Michael Gregory, senior economist at BMO Capital Markets in Toronto, said before the report. “Ultimately, lower prices and lower mortgage rates will begin to stabilize affordability.”
Economists’ surveyed by Bloomberg News forecast sales would decline to a 1.04 million rate from August’s originally reported 1.05 million pace. Forecasts ranged from 995,000 to 1.1 million.
The median price of a new home declined to $217,100 in September from $240,400 a year earlier, today’s report showed. It was the biggest decrease since an 11.2 percent year-over-year drop in December 1970, the Commerce Department said. The median price was the lowest since $211,600 in September 2004.
Inventories also declined. The number of homes for sale dropped to a seasonally adjusted 557,000 during the month, the lowest since March. The supply of homes at the current sales rate declined to 6.4 months’ worth from 6.8 months.