U.S. purchases of new homes fell more than estimated in September to the weakest pace since December 2016, adding to signs that a lack of affordability is crimping demand, according to government data Wednesday.
Single-family home sales fell 5.5% month over month (estimates were for a 0.6% drop) to a 553,000 annualized pace (estimates were for 625,000) after a 585,000 rate in August (revised from 629,000). Median sales prices decreased 3.5% year over year to $320,000. The supply of homes at the current sales rate rose to 7.1 months in September, the highest since March 2011, from 6.5 months.
The results fell below all forecasts in Bloomberg's survey of economists and showed downward revisions for the prior three months, signaling that the market ended the quarter on a weak note.
Sales fell in three of four regions, the report showed. A 1.5% decline in the South, the nation’s largest region, may reflect the impact of Hurricane Florence across North Carolina and South Carolina in mid-September. Previously released data on housing starts and sales of existing homes also showed the storm affected activity in the region.
The results are the latest signs that the housing market is losing momentum. While a strong job market and healthier finances signal demand is unlikely to suddenly collapse, potential buyers are increasingly constrained by rising property prices, higher mortgage rates and a scarcity of affordable listings.
New-home purchases are tabulated when contracts get signed, and account for about 10% of the market. They're considered a timelier barometer than purchases of previously owned homes, which are calculated when contracts close. Figures from the National Association of Realtors last week showed existing home sales fell in September to the weakest pace in almost three years.
The decline in purchases was led by a 40.6% percent plunge in the Northeast to the lowest level since April 2015 and a 12% drop in the West. The number of new houses on the market rose to 327,000 as of the end of last month, the most since January 2009, from 318,000.
