Steel Markets

New Home Sales Plummet in September

Written by Sandy Williams

Sales of new homes fell in September to a seasonally adjusted annual rate of 553,000, the lowest level since December 2016. Sales dropped 5.5 percent from the previous month and 13.2 percent from September 2017, according to the latest report from the Commerce Department.

“Home price gains and rising interest rates are slowing down the housing market, particularly in high-cost areas and among entry-level buyers who are sensitive to price increases,” said National Association of Home Builders chief economist Robert Dietz. “Builders need to provide homes at different price points to address these affordability concerns. Meanwhile, overall job and economic growth should help support the housing market in the months ahead as it adjusts to higher mortgage interest rates.”

The price of a new home last month averaged $377,200. The median price was $320,000.

At the end of September, an estimated 327,000 homes were in inventory, a supply of 7.1 months at the current sales rate.

“One thing is for certain, the economy cannot grow at a sustainable 3 percent pace for long if new home sales continue to tumble,” said Chris Rupkey, chief financial economist at MUFG Financial Group. “The Fed’s rising interest rates may be more harmful for economic growth than they thought, chiefly because of its effect on long-term interest rates and hence mortgage rates.”

Regionally, sales rose only in the Midwest, gaining 6.9 percent in September. Sales in the Northeast plunged 40.6 percent to its lowest level since 2015, followed by declines of 12 percent in the West and 1.5 percent in the South.

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