US new-home sales slump for 4th straight month

FILE- In this June 27, 2018, file photo, a sold sign stands in front of a home under construction in West Des Moines, Iowa. On Wednesday, Oct. 24, the Commerce Department reports on sales of new homes in September. (AP Photo/Charlie Neibergall, File)

WASHINGTON — Sales of new U.S. homes plunged 5.5 percent in September, the fourth straight monthly drop as the housing market cools with mortgage rates rising.

The Commerce Department said Wednesday that newly built homes sold at a seasonally adjusted annual rate of 553,000 last month. New-home sales in August were downwardly revised, erasing the previously reported gain. The annual rate of home sales has dropped 15.3 percent since May, eliminating much of the strength in sales from the first five months of 2018.

Builders had assumed that a stronger economy would push up sales, yet a greater share of new construction is going unpurchased. There is 7.1 months' supply of new homes on the market, the highest level since March 2011 when the real estate bust caused by subprime mortgages was still weighing on the economy.

Housing has found itself in a downturn in recent months despite the unemployment rate falling to a nearly half-century low of 3.7 percent.

The National Association of Realtors said last week that existing-home sales — the largest share of the market — had plummeted 3.4 percent in September to a seasonally adjusted annual rate of 5.15 million.

The major culprit for the decline in homebuying appears to be higher borrowing costs.

Average 30-year mortgage rates have climbed to 4.85 percent from 3.88 percent a year ago, according to mortgage buyer Freddie Mac. Increasing interest rates can make homeowners less likely to upgrade to a new property if it requires them to spend more each month on repaying a home loan.

The new-home sales report is volatile on a monthly basis. But the declines in September were sharpest in the Northeast and West, the two most expensive housing markets. New-home sales slipped in the couth and increased in the Midwest.

The average sales price has slumped 0.6 percent from a year ago to $377,200.

Must Read

Congress receives FBI notes from Clinton interview

Aug 17, 2016

Congress has received FBI documents related to the investigation of Hillary Clinton's use of a...

Ford says it will have a fully autonomous car by...

Aug 17, 2016

Ford Motor Co. intends to have a fully driverless vehicle _ no steering wheel, no pedals _ on the...

Railroads show little progress on key safety...

Aug 17, 2016

A government report shows many commuter and freight railroads have made little progress installing...

'Mr. Robot' mobile game launches as phony...

Aug 17, 2016

A fake messaging app inspired by the USA Network hacker 'Mr. Robot' was released Tuesday for mobile...

Wal-Mart raises annual profit outlook, reports...

Aug 18, 2016

Wal-Mart is raising its annual profit outlook after reporting strong quarterly sales and profit

About Us

Started in 2015, Science Of The World offers in-depth news about the latest scientific discoveries. If you’re looking for a reliable source, Science Of The World is the one for you.

Contact us: sales[at]scienceoftheworld.com

Subscribe Now!