New Homes Sales in the US fell for the first time since March with a 3.6% decline September following an upwardly revised one percent gain in August. Economists surveyed by Bloomberg had expected the measure to rise 2.6% as mortgage rates were at the lowest in months while consumer incentives including an $8,000 tax credit to first-time homebuyers was expected to boost sales. While the figure proved weak, housing sector woes may be offset in recent Existing Home Sales having risen 9.4% in September. Meanwhile, annualized sales fell to 402,000 from 417,000, the highest in eleven months. Looking deeper into the release, sales declined in the South and West regions, while improvement was only noted in the Midwest region. The month’s supply of homes, an indicator of how many months present sales would take to exhaust available supply, remained the lowest in more than two years. Also optimistic in the release were prices, which rose sharply on the month as the average price increased 10.2% to $282,600.
Looking ahead to October, further improvements in housing remain questionable as higher mortgage rates are proving to stunt growth. Earlier in the morning, the Mortgage Bankers Association weekly index on activity posted a 12.3% decline last week as the rate of 30-year loans remained above five percent for the third consecutive week. The fall followed a similar 13.7% drop for the week ended October 16. Further adding to distress, government incentives are due to run dry as buyers are unlikely to take advantage of the tax credit offered, while the Federal Reserve's quantitative easing program is set to end and likely lead to higher mortgage rates.
Reaction to the release has proven minimal as US markets remain near the lows of the session following slight volatility following the news. Elsewhere, commodities are low on the session with crude down more than one percent while the greenback strengthens significantly on exporting nations including Canada, Australia and New Zealand.
Annualized New Home Sales Chart
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