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Economy in Brief

U.S. New Home Sales Decline Though Prices Increase
by Tom Moeller October 28, 2009

The recovery in the housing market stuttered last month. Sales of new single-family homes fell during September following five consecutive months of increase. The seasonally adjusted annual sales rate of 402,000 followed a downwardly revised August level of 417,000 and it fell well short of Consensus expectations for a rise to 440,000 sales. Nevertheless, sales have risen by nearly one-quarter from the January low.

Home prices firmed last month, but the recovery this year has been tepid. The median price of a new single-family home rose to $204,800 from an upwardly revised August level. Nevertheless the latest figure, which was down 9.1% y/y, remained near the lowest level since October of 2003. The average price of a new home was less weak and off 1.6% y/y.

Price discounts, higher sales and much lower housing starts have combined to lower the overhang of unsold homes. A September decline dropped them by more than one-third versus last year to the lowest level since 1982 (no typo). In the West the number of homes for sale fell by nearly one-half to a record low while inventories elsewhere in the country fell by roughly one-third.

The months' supply of unsold homes held steady last month at 7.5 months and was down from the high of 12.4 months in January. The figure was the lowest since January 2007.

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US New Homes September August July Y/Y 2008 2007 2006
Total Sales (SAAR, 000s) 402 417 413 -7.8% 481 769 1,049
  Northeast 42 42 41  68.0 35 64 64
  Midwest 71 53 56 12.7 69 118 161
  South 188 209 215 -11.1 264 408 559
  West 101 113 101 -1.0 113 178 266
Median Price (NSA, $) 204,800 199,900 215,600  -9.1 230,408 243,742 243,067
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