Sales of newly constructed US single-family homes rose in September and inventories shrank as builders slashed prices to their lowest level in four years to move property as a financial crisis deepens. The annual sales pace of 464,000 homes was up 2.7 percent from the revised August figure of 452,000, originally reported as 460,000 homes, Commerce Department data showed on Monday.
Economists polled by Reuters expected the new homes sales pace to dip to 450,000 from that original figure. The median sales price of $218,400 was the lowest since the $211,600 level reached in September 2004, when the housing market was on the upswing. The housing inventory of 394,000 was the lowest since the 383,000 homes for sale in June 2004.
The 7.3 percent decline in inventory from August was the sharpest on record. At the current sales pace, it would take 10.4 months to clear the overstock of homes compared to the 11.4 months reported in August. Still, analysts said high inventories would continue to pressure prices.
"The tremendous overbuild suggests that prices will remain under year on year pressure out at least through mid-2009," said TJ Marta, rates strategist at RBC Barclays Capital Markets in New York. Markets showed little reaction to the fresh housing data.
Across the regions, the strength of markets varied greatly with sales down 21.4 percent in the Northeast and up 22.7 percent in the West. The Midwest was down 5.8 percent while the South was up 0.7 percent.
The pace of existing home sales rose sharply in September to a 5.18 million-unit annual rate to log the first year-over-year increase in sales in nearly three years, according to a report from the National Association of Realtors on Friday. Also on Monday, data on building permits showed a more narrow decline than first reported for September. The Commerce Department said that permit activity had declined by 6.1 percent - compared to the 8.3 percent decline first reported.