Martin Crutsinger
USA Today
WASHINGTON — Sales of new homes recorded an unexpected increase in September as median home prices dropped to the lowest level in four years, the Commerce Department reported Monday.
Sales of new single-family homes rose 2.7% last month to a seasonally adjusted annual rate of 464,000 homes, Commerce said. Economists had expected sales would drop from the August level.
The median price of a new home sold in September declined 9.1% from a year ago to $218,400, lowest since September 2004, when home prices were rising rapidly.
The surprising increase in September sales still left them 33% below a year ago as the country is battered by the worst slump in housing in decades.
The report of a rise in new home sales followed news last week that sales of existing homes rose 5.5% in September, largest monthly gain in more than five years.
Analysts are not convinced that the sales increases are signaling a bottom for the housing market. They note the September gains came before the latest upheavals in financial markets, which have raised new worries about the state of the economy.
Many analysts believe the country has already entered a recession. They are forecasting significant increases in job losses, which will make it even harder to mount a sustained rebound in housing.
New-home sales fell 21.4% in the Northeast and were down 5.8% in the Midwest. However, sales rose a sharp 22.7% in the West, a region that has seen some of the biggest declines in prices, which has spurred sales. Sales were up 0.7% in the South.
The rise in sales left a total of 394,000 unsold new homes on the market at the end of September, down a record 25.4% from the end of September 2007.
Builders have been sharply cutting back production, trying to get inventories more in line with sales.
Even with the latest drop in unsold new homes, the inventory represents a 10.4-month supply at the September sales pace, a historically high level.
The inventory of unsold existing homes also remains near historic highs as that market is being increased by a record wave of home foreclosures.
The 2.7% rise in sales for September new home sales followed a big 12.6% drop in August, which was revised sharply lower from the government’s initial estimate. Sales in July had risen 3.6%.
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