(CN) – Sales of new homes plunged in September to their lowest rate since December 2016, coming in 5.5 percent lower than in August and 13.2 percent lower than a year ago, the Commerce Department said Wednesday.
The government said new home sales ran at a seasonally adjusted annual rate of 553,000, and economists suggest the decline was mostly do to rising mortgage rates.
The only region to post a gain was the Midwest, where new home sales rose 6.9 percent.
The best and worst of the rest captured in the report occurred east of the Mississippi River. In the South, new home sales declined only 1.5 percent. But in the Northeast, sales effectively collapsed, declining 40.6 percent. That’s the lowest rate of new home sales since April 2015.
Meanwhile, new home sales in the West declined 12 percent.
Average 30-year mortgage rates have climbed to 4.85 percent from 3.88 percent a year ago, according to mortgage buyer Freddie Mac, but a decline median sales price, from $331,500 a year ago to $320,000 today, is providing some hope that the market is moderating enough to provide a bottom.
Builders had assumed that a stronger economy would push up sales, yet a greater share of new construction is going unpurchased. There is 7.1 months’ supply of new homes on the market, the highest level since March 2011 when the real estate bust caused by subprime mortgages was still weighing on the economy.
The National Association of Realtors said last week that existing-home sales — the largest share of the market — had plummeted 3.4 percent in September to a seasonally adjusted annual rate of 5.15 million.
The Associated Press contributed to this report.