Government Finds Evidence of a Softer Housing Market
By VIKAS BAJAJ
October 28, 2005
nytimes.com
Sales of new homes rose in September from the previous month, but prices dropped and the number of homes for sale increased, the government reported yesterday, in another sign of some softening in the housing market.
New home sales in September rose 2.1 percent from August, to an annual rate of 1.22 million, but that was slightly below sales in September 2004, the Commerce Department said. The median price - at which half the homes sold for more and half for less - fell 5.7 percent from August, to $215,700. Still, prices were up 1.9 percent from a year earlier. Also, the August home sales figure was lowered to 1.197 million from the 1.237 million reported initially.
In September, homes on the market rose 3.1 percent, to 493,000, a 4.9-month supply. That was up slightly from August and almost 20 percent from September 2004.
Sales were strongest in the Midwest, up 24.9 percent from August, and the South, up 5.6 percent. In the Northeast, the region with the least new-home-building activity, sales were down 20 percent, and in the West they were down 11.8 percent.
The report came two days after the National Association of Realtors said sales of existing homes were unchanged in September. New and existing home sales data do not move in tandem because the Realtors count an existing home as sold when a contract is closed, while new home sales are counted when the contract is signed. New home sales make up 15 percent of the market.
Economists said both sales reports showed that the housing market had lost some steam this fall but remained at an elevated level.
"It's certainly consistent with the idea that the upturn has ended," James O'Sullivan, an economist at UBS, said.
Since home sales hit records this summer, mortgage rates have climbed steadily - reaching a national average of 6.15 percent for 30-year fixed-rate loans this week, up from 5.53 percent at the end of June, according to Freddie Mac. The Mortgage Bankers Association said on Wednesday that its weekly index of loan volume was down 7.9 percent for the week that ended Oct. 21.
"We are definitely headed for record home sales in 2005," David F. Seiders, the chief economist at the National Association of Home Builders, said in a statement. "However, the pattern of sales in recent months suggests that the new home market may have tapped out around midyear, a conclusion consistent with findings from our builders surveys."
But even stabilization in home sales could affect the economy, analysts say, because rapidly rising home sales and mortgage refinancing have driven up consumer spending and generally made people more well off. "This has important implications for overall growth," Mr. O'Sullivan said.
Separately, durable goods orders fell 2.1 percent in September, after jumping 3.8 percent in August, according to the Commerce Department, as orders for military equipment and airplanes dropped. Excluding the transportation sector, orders for durable goods - those that last more than three years - fell 1 percent last month.
Daniel J. Meckstroth, chief economist of Manufacturers Alliance/MAPI, a research and consulting group, said September was unusual because of a strike at Boeing and Hurricane Katrina.
Also, the Labor Department reported yesterday that claims for unemployment insurance fell to 328,000 last week, from 356,000 the week before, as applications from people displaced by Hurricanes Katrina and Rita continued to drop. Jobless claims dropped by 24,286 in Louisiana and 7,336 in Mississippi. |
