Sales of New U.S. Homes Hits Five-Month High
Purchases of new U.S. houses rose more than forecast in September as discounted prices lured buyers in some parts of the country.
Sales climbed 5.7 percent to a 313,000 annual pace, figures from the Commerce Department showed today in Washington. The median estimate of economists surveyed by Bloomberg News called for a gain to 300,000. The median price slumped 10 percent from September 2010, the biggest drop in more than two years. Another report showed demand for durable goods excluding transportation equipment climbed last month by the most since March.
The increase in home sales was paced by rising demand in the West and South, while other parts of the country slumped, showing an uneven market that is weighed down by competition from a glut of distressed, previously owned houses. Last month’s sales pace was weaker than the 323,000 new homes sold in all of 2010.
“Up slightly is faint praise,” Robert Dye, chief economist at Comerica Inc. in Dallas, said before the report. “We’re still under the black cloud of high foreclosures and depressed prices. We’re still bouncing along the bottom in terms of new homes.”
Economists’ estimates ranged from 275,000 to 320,000. The government revised August demand to 296,000 from a previously reported 295,000.
Demand for goods meant to last at least three years, excluding of airplanes and automobiles, climbed 1.7 percent in September, exceeding the 0.4 percent increase median forecast of economists surveyed by Bloomberg, another report from the Commerce Department also showed. Total bookings fell 0.8 percent, depressed by a 26 percent plunge in planes.
Stocks rose after the reports and as Germany approved plans to leverage Europe’s rescue fund. The Standard & Poor’s 500 Index climbed 0.5 percent to 1,235.7 at 10:07 a.m. in New York. Treasury securities fell, sending the yield on the benchmark 10- year note up to 2.16 percent from 2.1 percent late yesterday.
The data on home sales showed the median price of a new house decreased to $204,400 in September from $228,000 in the same month last year. The percentage drop was the biggest since April 2009.
Purchases rose 11 percent in the South and 9.7 percent in the West. Demand in the Midwest dropped 12 percent, and 4.2 percent in the Northeast.
The supply of homes at the current sales rate fell to 6.2 month’s worth, the lowest since April 2010, from 6.6 months in the prior month. There were 163,000 new houses on the market at the end of September, the same as in August.
Sales of previously owned homes, which make up about 94 percent of total housing demand, fell 3 percent to a 4.91 million annual rate in September, figures from the National Association of Realtors showed Oct. 20. The median price dropped 3.5 percent from September 2010. Cash deals accounted for 30 percent of the transactions, while distressed properties, including foreclosures and short sales, also made up 30 percent.
New home sales, which are tabulated when contracts are signed, have lost their ability to forecast the broader market as demand shifts to previously owned houses. Purchases of existing houses are calculated when a deal closes about a month or two later.
A glut of distressed properties on the market is holding down prices, keeping housing from contributing to the economic rebound. Unemployment has been 9.1 percent for the last three months, wages are stagnate and stock prices have dropped this year on concerns about a European sovereign debt default and recession.
Scottsdale, Arizona-based Meritage Homes Corp. (MTH), which builds energy-efficient single-family homes, saw its sales in the quarter ended in September rise from a year earlier even as demand remains at “depressed levels,” executive vice president Brent Anderson said on an Oct. 12 conference call.
“We need to have more people in jobs, good, well-paying, full-time jobs,” Anderson said. “It’s really a matter of confidence.”
Housing permits, a sign of future construction, fell 5 percent in September to a five-month low, while starts surged 15 percent, boosted by a 51 percent jump in the volatile multifamily category, the Commerce Department reported last week.
Federal Reserve Bank of New York President William C. Dudley this week said falling home prices pose “a serious impediment to a stronger economic recovery.”
President Barack Obama unveiled a plan to let homeowners refinance mortgages regardless of how much their houses have dropped in value, expanding a government effort to chip away at one of the economy’s most unyielding problems.
Lawmakers and analysts briefed this week on the plan by the independent Federal Housing Finance Agency estimate they will help less than 1 million borrowers -- and perhaps as few as 600,000 -- of the 11 million whose mortgages are higher than the value of their homes.
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