New House Sales at Slowest Pace Since ’82

Led by weakness in the fragile Northeast, sales of new homes fell to their lowest level in September since the recession eight years ago, the Commerce Department said Tuesday.

Single-family home sales plunged 6% last month after declines of 1.8% in August and 0.9% in July, the department said.

The latest drop pushed home sales to a seasonally adjusted annual rate of 503,000 units in September, the slowest pace since the 480,000-unit rate in recession-era October, 1982, it said.

With the economy widely expected to lose steam and possibly slip into a recession, economists predict that things will get worse for the home-building industry before they get better.

Depressed by high interest rates, slowing job growth and waning consumer confidence, the home-building industry has been in a slump for more than a year. Also slowing home sales has been a growing number of “move-up” buyers who are slower to strike a deal than first-time buyers, economists said.

So far this year, the actual number of new homes sold has fallen 15% to 435,000. In September, the sales total before seasonal adjustment fell to 38,000 units from 47,000.

The slump has been particularly severe in the Northeast, where sales fell 15.6% in September to an annual rate of 54,000 units.

In the South, sales fell 7.9% to a rate of 223,000, while in the Midwest, they were down 2.2% to a 91,000-unit annual rate. Sales in the West slipped 0.7% from August to a rate of 136,000 units.

Home Sales Seasonally adjusted annual rate, thousands of units Sept., ‘90: 503 Aug., ‘90: 535 Sept., ‘89: 638 Source: Commerce Department Home Sales, Associated Press/ Los Angeles Times