New-Home Sales Dip; Jobless Claims Fall
Sales of new homes slipped for a second straight month in September, the Commerce Department said Thursday, as a few signs emerged that a jittery stock market may take a toll on future economic growth.
Cross-country sales eased 0.2% last month to a seasonally adjusted annual rate of 800,000 units, after a revised 2.3% fall in August. Analysts forecast a further decline in the current fourth quarter and in 1998, noting that investor losses may play a role in the slowing.
Separately, the Labor Department said new claims for unemployment benefits tumbled by 16,000 last week, to 297,000. It was the lowest level for new claims in three months, reflecting a bountiful job market that has employers scrambling to find new employees.
But a private survey of manufacturing industries, the monthly APICS survey by the Educational Society for Resource Management in New York, showed a sharp slowing in activity during October, as shipments, new orders and unfilled orders weakened from September.
The APICS business outlook index dropped to 45.1 in October from 54.3 in September. Its employment component was still strong, but the APICS report said it foresaw “the onset of slower growth in the manufacturing sector.”
Sales of new homes had been forecast to rise instead of fall in September. Last month’s sales pace was still 4.2% above the level of September 1996, when new homes sold at an annual rate of 768,000. The pace is expected to level off in coming months.
David Seiders, economist for the National Assn. of Home Builders, said fourth-quarter new-home sales were likely to drop to an average of 780,000, from 808,000 in the third quarter that ended Sept. 30.
“There will be a tapering off unless mortgage rates really drop,” he said. “There is an inevitable fall in job growth coming and hence in income.”
Seiders said losses suffered by investors amid recent stock market gyrations will have some impact on new-home sales, though it is uncertain how great an impact.
One factor offsetting U.S. stock market volatility is falling interest rates, as money shifts from the stock market to bonds in a bid for safety. A key consequence is that borrowing costs have fallen, because more money is available in credit markets.
On Monday, the National Assn. of Realtors said sales of existing homes rose 0.2% in September, to a record seasonally adjusted annual rate of 4.32 million.
For new homes, the biggest drop in September sales occurred in the Northeast, where they plunged 12.2% to 65,000 a year--the lowest level since May 1996, when sales were at a rate of 57,000. Sales in the South were down 3.7%, to a 363,000 annual rate.
But in the West, sales were up 9%, to 230,000 a year, and in the Midwest they increased 2.1%, to 143,000.
Inventories of completed new homes for sale remained steady at 286,000 in September--the same as in August and the lowest level since 278,000 homes were on the market in July 1993.
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New-Home Sales
Seasonally adjusted annual rate, in thousands of units:
Sept.: 800
Source: Commerce Department
