New-home Sales Climb 6.6 Percent in September

By Steve Goldstein

RISMEDIA, October 28, 2010--(MCT)--Sales of new homes climbed 6.6 percent in September, figures released by the federal government on Wednesday showed, representing the second straight month of gains, but still well below the pace when a tax credit existed.

Sales of new single-family homes rose 6.6 percent to a seasonally adjusted annualized rate of 307,000, which is stronger than the 300,000 that economists expected in a MarketWatch-compiled poll.

On Monday, a report showed sales of existing homes also were stronger than expected, rising 10 percent, and the two reports lend support to some economists who believe housing demand hit a bottom in late summer.

"After dropping precipitously following the expiration of the first-time homebuyer tax credit, it looks as though new home sales have stabilized," said Nicholas Tenev, an economist at Barclays Capital. "We expect a gradual recovery over the coming months."

Still, the pace of new-home sales is 21.5 percent below the same level of last year.

The pace of new-home sales also is considerably below the 414,000 rate in April, when the market was buoyed by a tax credit that has since expired.

There's also still plenty of supply, with the government estimating supply of 8 months of unsold homes, though that's down from 8.6 months in August. The stock of unsold houses fell 1 percent from August and dropped 19 percent from Sept. 2009.

"With little new construction going on, inventories of unsold new homes at least aren't a problem even with sales at such a severely depressed level, with the number of new homes for sale extending a run of record lows," said David Greenlaw, an economist at Morgan Stanley.

The median sales price rose 1.5 percent from August and 3.3 percent from Sept. 2009 to $223,800 — about 30 percent above the median price of an existing home.

The margin of error for new-home sales is a considerable plus or minus 16.9 percent.

September's housing market was only partly affected by a foreclosure moratorium of some leading lenders, which gathered pace in October.

New-home sales, by definition, wouldn't be affected by foreclosure disputes and in fact could benefit by virtue of purchasers getting "clean" title when buying new properties.

(c) 2010, MarketWatch.com Inc.
Distributed by McClatchy-Tribune Information Services