Sales of new homes ease as prices dip to lowest since 2017

Sales of new homes eased and prices continued their downward trend, suggesting the momentum in the sector may be slowing despite low mortgage rates and steady wage gains.

Single-family home sales fell 0.7% to a 701,000 annualized pace, nearly matching economist estimates, while the August figure was revised down, government data showed Thursday. The median sales price decreased 8.8% from a year earlier to $299,400, the lowest since February 2017.

Despite the drop, the latest figures show the sector remains on broadly solid footing as higher wages and lower borrowing costs have offset some of the affordability challenges from lean supply. Still, the signs of cooling follow six-straight quarters in which housing weighed on the economic expansion.

Recent data have been mixed. Existing-home sales dropped in September to the slowest pace in three months, while single-family housing starts accelerated for a fourth month. Homebuilder sentiment rose in October to the highest since early 2018.

The supply of homes at the current sales rate held at 5.5 months, unchanged from the prior period. The number of new homes for sale decreased for a fourth month, to 321,000.

The number of properties sold for which construction hadn't yet started ticked up to a three-month high, indicating a healthy pipeline for homebuilders.

Purchases of new homes declined in three of four U.S. regions, led by the West and Northeast. The Midwest rose.

Economists in Bloomberg's survey projected a pullback to a 702,000 annualized pace for September sales. Estimates ranged from 670,000 to 735,000.

New-home purchases account for about 10% of the market and are calculated when contracts are signed. They are considered a timelier barometer than purchases of previously owned homes, which are calculated when contracts close. The figures tend to be volatile.

The report is published jointly by the U.S. Census Bureau and the Department of Housing and Urban Development.