US New Home Sales Suffer Major Dip in September

Sales of new US homes retreated in September while prices slumped and the supply on the market held steady, the government reported Thursday.

Despite the decline, economists said the results showed the US housing market remains a bright spot, benefitting from attractive mortgage rates, rising wages, and historically low unemployment.

And the overall increase in the third quarter new home sales could see housing contribute to GDP growth after dragging on the economy for nearly two years.

Total sales of single-family homes fell 0.7 percent to a still-solid annual rate of 701,000, seasonally adjusted, according to the Commerce Department data, which was largely in line with economists’ expectations.

A bump in the Midwest helped offset falling sales elsewhere in the nation, and compared to September of last year, total sales were still up 15.5 percent, the report said.

The levels were well within broad margins of error, however, and officials say trends only become visible after four months.

Amid rising wages and historically low unemployment, sales forged higher in June, July, and August.

But the far larger market for existing homes also fell in September, according to industry data released earlier this week.

RDQ Economics said the third-quarter sales volume was the highest in 12 years.

“We believe that lower mortgage rates and continued job gains will support housing demand and that this will translate into higher construction levels,” the firm said in a note to clients.

Scarce labor, high costs for materials in part due to tariffs, and fear that President Donald Trump’s trade wars could scare off would-be buyers had previously made some homebuilders reluctant to add to the supplies.

Nationwide, inventories of homes for sale were largely unchanged and at the current sales pace represented a supply of 5.5 months, the same as in August, according to the report.

Meanwhile, the median sales price fell 7.9 percent to $299,400, the cheapest since February of 2017.

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