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September New Home Sales Increase by a Weak 4 Percent

Mortgage News > September New Home Sales Increase by a Weak 4 Percent
Date: 10/27/2007    September New Home Sales Increase by a Weak 4 Percent

New home sales in the U.S. increased by 4 percent last month, but are down 24 percent compared with year-over-year figures, according to the Census Bureau Thursday.

The latest data showed that new home sales in September moved to an annual rate of 770,000 units, up from August's revised 735,000 pace. Last month's reading was lower than the 775,000 predicted by economists surveyed by

"Given the substantial downward revisions to home sales numbers for June, July and August, it must be said that this is still a fundamentally weak report," said David Seiders, chief economist for the National Association of Home Builders.

"We saw an upsurge in cancellations in August and September, according to all the builders," he added. "The net sales, if we could get that number, would clearly be weaker than this. It's too early to get hopes up on this report."

Regionally, sales fell 19.5 percent in the Midwest and 6.6 percent in the Northeast, but rose 0.5 percent in the South and 37.7 percent in the West.

"The large sales gains reported in the West region are highly suspicious, given the results of our own builder surveys and large downward movements in existing-home sales in that region. On the positive side, builders do seem to be making progress on reducing the substantial overhang of unsold units on the market, according to the latest figures."

The number of new homes on the market fell to 523,000 units, representing an 8.3-month supply, down from a 9-month supply in August.

The median price of a new home rose to $238,000, up 5 percent from last year.

Even this positive sign must be taken with a grain of salt, according to Seiders. The median price does not account for costly builder incentives.

"These price numbers are just about useless," said Seiders. "Price cuts are widening and deepening. We know that."