New U.S. home sales ease in September as median price slips from a year earlier

Higher mortgage rates and affordability pressures weighed on new single-family home sales and pushed prices lower, according to Commerce Department figures.

Sales of new U.S. single-family homes fell 0.6% in September to a seasonally adjusted annual pace of 676,000 units, trimming part of the prior month’s gain.

The big picture: Sales for August were revised down to 680,000 units from the earlier estimate of 684,000.

• Economists had expected a steeper decline, to 650,000 units.

Zoom in: Sales weakened in the Midwest and South, while the Northeast and West posted solid gains.

• Mortgage rates have climbed more than 130 basis points since the U.S. and Israel attacked Iran at the end of February, and the average 30-year fixed mortgage rate reached 7.32% last week.
• A National Association of Home Builders survey found builders’ sales expectations for the next six months had dropped to their lowest level since April 2012, excluding the pandemic period.
• The median new-home price declined 3.9% from a year earlier to $400,400 in September, with most homes sold for less than $499,999.
• The number of new homes available for sale fell to 476,000 in September from 481,000 in August.

What we’re watching: At the current sales rate, it would take 8.4 months to work through the inventory, slightly below the 8.5 months recorded in August.

• Elevated inventory levels are discouraging builders from launching new projects, with single-family housing starts and permits dropping to a 3.5-year low.