U.S. New-Home Sales Tumble in September

WASHINGTON—Sales of newly built homes fell across the country in September, suggesting a segment of the housing market could be cooling. Purchases of new single-family homes fell to a seasonally adjusted annual rate of 468,000 in September, the Commerce Department said Monday, down 11.5% from August’s downwardly revised rate of 529,000. The reported figure has a margin of error of plus or minus 11.3 percentage points. Economists surveyed by The Wall Street Journal had expected a figure of 555,000. September’s pace of newly built home sales is up 2% from September a year ago. There were 5.8 months’ supply of newly built homes in September, the highest level since July 2014. The number of homes for sale at the end of September stood at 225,000, the most since March 2010, although most of the 9,000-home uptick was in homes that weren’t yet started or still under construction. Home builders have reported labor shortages as many construction workers who lost jobs during the recession moved on to other industries or left the labor market altogether. Edwin Woods, a division president of Dan Ryan Builders, which operates in six East Coast states, said inventories are tight in his region in North Carolina because supply isn’t keeping up with demand. He hasn’t been able to keep speculative homes—those that go under construction without a buyer lined up—in stock. “We barely have any homes currently available that will deliver in the next 60 days,” Mr. Woods said. The median sales price of new homes stood at $296,900, up from $261,500 a year ago. Purchases of new homes fell in every region of the country in September, but the drop was most precipitous in the Northeast. The rate of home sales in the Northeast region fell by 61.8% in September from August, and is down 56.7% from September a year ago. The South and West regions are still up from September 2014, despite a downward tick last month. New-home sales figures are volatile and frequently revised. Despite September’s drop, 2015 has seen a significant improvement in the overall rate of new home sales. The year-to-date rate of new-home sales, not seasonally adjusted, is up 17.6% from the year-earlier period. “The September report was a clear disappointment, but does little to alter our view that the housing market is continuing to recover,” said Daniel Silver, an economist at J.P. Morgan Chase, in a note to clients. “We view the new home sales data as unreliable and many other more reliable housing indicators have been sending upbeat signals lately.” Sales of existing homes rose 4.7% in September to the second-highest pace in eight years, as continued low interest rates and pent-up demand supported the housing recovery. Existing-home sales account for about 90% of the residential real-estate market. U.S. home building rebounded in September after two straight months of declines, the Commerce Department said last week, largely due to a sharp increase in construction of apartments and other multifamily housing. And a gauge of home-builder sentiment rose to a 10-year high in October, a sign of momentum for a key sector of the economy. Whether the housing market can continue its recovery in the face of domestic and global headwinds remains to be seen. The pace of job creation slowed in September, with employers adding just 142,000 jobs, and an average of 167,000 a month over the past three months. That three-month rate was the slowest pace since February 2014. Some factors remain supportive, such as a decision in September by the Federal Reserve not to raise short-term interest rates, which would have likely caused mortgage rates to rise. But wage gains have been muted over the recovery, despite steady job creation over the past six years. That makes it harder for potential buyers to save for a down payment on a home, especially in regions like the South and West, where home prices have risen fast over the past year. Economist Stephen Stanley at Amherst Pierpont Securities said September’s “whopping” fall from August was “most likely statistical noise,” given the volatility of the new-home sales figures, but noted that it could reflect what was a bumpy September for financial markets. “With concerns over the state of the economy in the wake of the August/early September hiccup in markets, we will need to hold our collective breath for a month and see whether the September soft patch a) was real and b) lasts long enough to make a difference in the big picture,” he said in an analyst note. Write to Anna Louie Sussman at anna.sussman@wsj.com and Kris Hudson at kris.hudson@wsj.com This article originally appeared on The Wall Street Journal