U.S. New Home Sales Inch Up From Downwardly Revised Level

(RTTNews) - While the Commerce Department released a report on Friday showing a modest increase in new home sales in the U.S. in the month of September, the uptick came from a significantly downwardly revised level in August.

The report said new home sales inched up 0.2 percent to an annual rate of 467,000 in September from the revised August rate of 466,000.

Economists had been expecting new home sales to drop to a rate of 460,000 from the 504,000 originally reported for the previous month.

With the modest increase, the annual rate of new home sales reached its highest level since hitting 477,000 in July of 2008.

Peter Boockvar, managing director at the Lindsey Group, said, "The level of new home sales continues to creep higher but at a glacial pace and at 467,000, the current level remains extremely depressed."

"One would hope that the new round of lows in the average 30-year mortgage rate would lead to an improvement in sales but according to the MBA, that has yet to be seen," he added. "Refi's have been the only beneficiary so far."

The uptick in new home sales was partly due to a notable increase in sales in Midwest, where new home sales jumped 12.3 percent to an annual rate of 64,000.

New home sales in the South also rose by 2.0 percent, while sales in the Northeast came in unchanged and sales in the West tumbled by 8.9 percent.

The report also showed a sharp drop in the median sales price of new houses, which plunged 9.7 percent to $259,000 in September from $286,800 in August. The median sales price was down 4 percent year-over-year.

"Whether this is the beginning of a round of discounting we'll soon see, but it might be necessary in order for home builders to better compete against both existing homes for sale and rentals," Boockvar said.

Additionally, the Commerce Department said the estimate of new houses for sale at the end of September was 207,000 compared to 204,000 at the end of August.

The number of new houses for sale represents 5.3 months of supply at the current sales rate, unchanged from the previous month.

On Tuesday, the National Association of Realtors released a separate report showing that U.S. existing home sales increased by more than anticipated in the month of September.

NAR said existing home sales climbed 2.4 percent to a seasonally adjusted annual rate of 5.17 million in September after falling 1.8 percent to a rate of 5.05 million in August. Economists had expected existing home sales to rise to a rate of 5.10 million.

With the bigger than expected rebound, existing home sales rose to their highest annual rate since reaching 5.26 million in September of last year.