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)

Single-family home sales fell 5.5 per cent m/m (est. 0.6 per cent drop) to 553k annualized pace (est. 625k) after 585k rate (revised from 629k) Median sales price decreased 3.5 per cent y/y to US$320,000 Supply of homes at current sales rate rose to 7.1 months, the highest since March 2011, from 6.5 months

Key Takeaways

- 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 0.6 per cent as of 10:50 a.m. in New York, bringing its decline this year to 35 per cent.

- Sales fell in three of four regions, the report showed. A 1.5 per cent 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 per cent 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.

Other Details

- The decline in purchases was led by a 40.6 per cent plunge in the Northeast to the lowest level since April 2015 and 12 per cent drop in the West

- Report showed 90 per cent confidence that the change in sales last month ranged from a 17.6 per cent drop to a 6.6 per cent rise, underscoring the volatility of the data

- Number of new houses on the market rose to 327,000 as of the end of last month, the most since January 2009, from 318,000

- Data released jointly by the Census Bureau and Department of Housing and Urban Development in Washington