New Home Sales Up, But Still Weak

New home sales edged up in September, but remain at their weakest levels in at least half a century, according to figures released by the Commerce Department today.

Sales of new single-family homes were up 6.6 percent for the month, to a seasonally adjusted annual rate of 307,000 units. However, that figure is still one of the lowest ever reported by the Commerce Department since it began tracking new home sales in 1963.

The past five months, beginning with May’s sales figures, have all been the lowest on record, despite the U.S. population increasing by more than 50 percent since 1963. The current figure represents a 21.5 percent annual decline from the September 2009 estimate of 391,000, although figures through the latter portion of 2009 and early 2010 were boosted by the impact of the homebuyer tax credit.

The credit, which expired last spring, is generally thought to have pulled forward home sales by encouraging potential buyers to act sooner than they otherwise would have, temporarily boosting sales but leaving depleted demand in its wake. As a result, sales of both new and existing homes have fallen sharply since the program’s end and are just beginning to rise again.

September’s increase was driven by a big jump in new home sales in the Midwest, which saw a more than 60 percent increase over August’s figures. Sales in the South and Northeast were up only 3.2-3.4 percent, respectively, while sales in the Western region of the country declined 9.9 percent for the month.

The Commerce Department cautions that all figures are subject to significant sampling errors and that several months are required to clearly identify trends.

The median price paid for a new single-family home was up slightly for the month, to $223,800, from 220,500 the month before. That’s also up from the $216,600 median price reported one year ago for September 2009.

Prior to the past five months, the survey’s previous low was 338,000 in September 1981; the highest was 1,389,000 at the height of the housing bubble in July 2005. The current sales rate has not topped 310,000 since last April. Visit www.firstsouthloan.com for updated economic data everyday.