Sales of new U.S. homes rose by 5.7% in September — the first increase in four months — as builders cut prices to the lowest level in nearly a year.
The Commerce Department said new single-family home sales climbed to an annual pace of 313,000 in September from August’s slightly revised level of 296,000. The numbers are seasonally adjusted.
Economists polled by MarketWatch had forecast new home sales to rise to 300,000.
Buyers were attracted by lower mortgage rates and falling home prices. The median selling price of new homes, for instance, fell more than 10% year-over-year to $204,400 — a 3.1% decline compared with the previous month — marking the lowest level since last October.
The median price has fallen three straight months after hitting a nine-month high of $240,200 in June.
Yet total sales of new homes are still 0.9% lower compared with one year ago, and the number of properties on the market — 163,000 — remained at a record low.
“Sales remain extremely subdued by historical standards,” said economist Andrew Grantham of CIBC World Markets. Sales would have to at least double to restore the housing sector to good health, analysts say.
What’s more, slack demand has prompted builders to scale back even more. Only 76,000 new homes were under construction in September, the lowest level ever recorded.
As a result, the supply of new homes available fell to 6.2 months at the current sales pace from 6.6 months in August. That’s the lowest level in almost a year and a half.
Another economic report found that companies ordered more heavy machinery, computers and other long-lasting manufactured goods in September, more good news for the slumping economy.
An increase in demand for those types of durable goods suggests businesses are sticking with investment plans despite slow growth and dismal consumer confidence.
Overall demand for durable goods fell 0.8%, the Commerce Department said Wednesday. But that was largely because of a huge decline in volatile commercial aircraft orders and also because orders for autos and auto parts fell.
Excluding transportation, orders rose 1.7%. And demand for core capital goods, which are a measure of business investment plans, rose 2.4%. That’s the second straight monthly increase and the biggest gain in six months.
Bartash writes for MarketWatch.com/McClatchy