U.S. new home sales drop to near one-year low

After two straight months of gains, new U.S. single-family home sales fell to near a one-year low.
After two straight months of gains, new U.S. single-family home sales fell to near a one-year low.PHOTO: REUTERS

WASHINGTON (REUTERS) - New U.S. single-family home sales fell to near a one-year low in September after two straight months of gains, suggesting a temporary cooling in the market for new houses.

The Commerce Department said on Monday sales dropped 11.5 per cent to a seasonally adjusted annual rate of 468,000 units, the lowest level since November 2014. August's sales pace was revised down to 529,000 units from the previously reported 552,000 units.

Economists polled by Reuters had forecast new home sales, which account for 7.8 per cent of the market, slipping to a rate of 550,000 units. Sales were up 2.0 per cent compared to September of last year.

The moderation in new home sales is likely to be temporary as other housing reports have painted an upbeat picture of the sector. In addition, new home sales tend to be volatile month to month because they are drawn from a small sample.

September data on existing home sales, home builder confidence and housing starts have been fairly strong.

A sturdy housing market is supporting consumer spending through an increase in household wealth, which is helping to soften the blow on the economy from faltering global growth, a strong dollar and weak capital spending in the energy sector.

Efforts by businesses to reduce an inventory bloat also have weighed on growth, leaving gross domestic product growth estimates for the third quarter running below a 2.0 per cent annualized rate.

The economy grew at a 3.9 per cent rate in the second quarter. The government will publish its advance third-quarter GDP estimate on Thursday.

New home sales tumbled 61.8 per cent in the Northeast to the lowest level since April. Sales declined 6.7 per cent in the West and were down 8.7 per cent in the populous South. In the Midwest, sales fell 8.3 per cent.

With sales weak, the stock of new houses for sale increased 4.2 per cent to 225,000 last month, the highest level since March 2010. Still, supply remains less than half of what it was at the height of the housing boom.

At September's sales pace it would take 5.8 months to clear the supply of houses on the market, up from 4.9 months in August. The median price of a new home rose 13.5 percent from a year ago to US$296,900.