New Home Sales Up After Major August Revision

Sales of newly built, single-family homes edged up in September, but a sharp downward revision to August's sales figure put a damper on the good news.

The Commerce Department and HUD estimate that new home sales were at a seasonally adjusted annual pace of 467,000 in September, according to a joint report from the agencies. September's sales rate marks a 0.2 percent increase over August's revised rate and a 17 percent jump above the September 2013 rate of 399,000.

New home sales in August, originally reported at an annual pace of 504,000—a six-year high—were brought down dramatically in the government's revised estimate. New homes that month are now estimated to have sold at an adjusted annual rate of 466,000.

While the revision might be unwelcome, it wasn't unexpected. In a forward-looking measure based on mortgage applications for new home purchases, the Mortgage Bankers Association (MBA) predicted sales in September would come in at a rate of 425,000, forecasting a cut in August's numbers.

"Earlier this summer, and again last month, the first estimates from Census were significantly higher than the estimates implied from the applications data," MBA Chief Economist Mike Fratantoni said earlier this month. "However, the revised data from Census resulted in a much closer match to MBA's estimates, and we anticipate that will be the case going forward, given the high rate of coverage in our survey."

Economists also forecast a sales rate of 460,000 in September, indicating they expected either a massive downturn month-over-month or a drastic change in August's revised estimate.

New home sales rose last month in two census regions: the Midwest and South, which posted monthly gains of 12.3 percent to 64,000 and 2.0 percent to 261,000, respectively. Sales were flat in the Northeast at a rate of 30,000 and down 8.9 percent in the West to a rate of 112,000.

Annually, sales were up in all regions, climbing nearly 20 percent in the Northeast, South, and West.

The seasonally adjusted estimate of new homes for sale at the end of September was 207,000, representing a months' supply of 5.3 months at the current sales rate.

The median sales price of new houses sold last month was $259,000, according to the Census and HUD, down substantially from August's median of $286,800. The average sales price was also down, dropping more than $35,000 to $313,200.