U.S. New-Home Sales Tumble to Lowest in Almost Two Years
(Bloomberg) -- U.S. purchases of new homes fell more than estimated in September to the weakest pace since December 2016, adding to signs that a lack of affordability is crimping demand, according to government data Wednesday.
Highlights of New-Home Sales (September)
The results fell below all forecasts in Bloomberg’s survey of economists and showed downward revisions for the prior three months, signaling that the market ended the quarter on a weak note.
A gauge of homebuilder stocks erased gains and was down 1 percent as of 1 p.m. in New York, bringing its decline this year to 35 percent.
Sales fell in three of four regions, the report showed. A 1.5 percent decline in the South, the nation’s largest region, may reflect the impact of Hurricane Florence across North Carolina and South Carolina in mid-September. Previously released data on housing starts and sales of existing homes also showed the storm affected activity in the region.
The results are the latest signs that the housing market is losing momentum. While a strong job market and healthier finances signal demand is unlikely to suddenly collapse, potential buyers are increasingly constrained by rising property prices, higher mortgage rates and a scarcity of affordable listings.
New-home purchases are tabulated when contracts get signed, and account for about 10 percent of the market. They’re considered a timelier barometer than purchases of previously owned homes, which are calculated when contracts close. Figures from the National Association of Realtors last week showed existing home sales fell in September to the weakest pace in almost three years.
“By nearly all accounts, the slide in new home sales appears to be demand-driven and is not due to supply constraints,” Mark Vitner, a senior economist at Wells Fargo & Co., wrote in a note. “As such, single-family starts will likely fall further in coming months.”
What Our Economists SayWe estimate that housing will pose a drag on third-quarter GDP growth -- the preliminary release is due on Friday. Bloomberg Economics projects the residential investment segment will subtract from full-year GDP growth in 2018 for the first time since 2010.
-- Yelena Shulyatyeva and Carl Riccadonna, Bloomberg Economics
Read more for the full report from Bloomberg Economics.