New-home sales rise in September

The latest data from the Department of Commerce indicate sales of new single-family homes rose slightly in September from August while average home prices fell to their lowest level in almost three years. New-home sales rose 2.7% in September to a seasonally adjusted rate of 464,000 homes. That’s down 33.1% from the same month a year ago, the report said. The Northeast saw the biggest year-over-year decline, falling 65.1%, the data said. This was followed by the West where sales tumbled 37.9%, the Midwest, 37.5%; and the South, 23.8% The average sales price of homes sold in September was $275,500, down from $292,200 a year earlier — the lowest level since December 2005, when the price averaged $272,900. The September sales exceeded market expectations of 450,000 homes, analyst Josh Levin of Citigroup Global Markets in New York wrote in a research note. However, he believes the figures may be overstating the true sales activity, as the Census Bureau only tracks contract signings and not purchase closings. “When a buyer elects to cancel his or her contract and not purchase the home, the data does not reflect the cancellation,” he wrote. “Given that the economy, markets and headlines generally took a meaningful turn for the worse in October, we would expect that many of the September sales will not close as buyers instead cancel and move to the sidelines.” Inventory also fell in September. The number of homes for sale at the end of September was 394,000, down 7.3% from August and down 25.4% from a year ago, according to the report. In a note, analyst Carl Reichardt of Wachovia Capital Markets LLC of Charlotte, N.C., said he believes the sharp drop-off in new construction is starting to help clear excess inventory in the market. However, he said, demand remains weak as buyers struggle with a difficult economy and tougher lending standards.