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New single-family home sales in the US dip in September

Washington

SALES of new US single-family homes fell in September as low inventories continued to weigh on sales even as prices saw the biggest monthly fall in five years.

The Commerce Department said on Thursday that new home sales declined 0.7 per cent to a seasonally adjusted annual rate of 701,000 units last month, matching expectations. August's sales pace was revised down to 706,000 units from the previously reported 713,000 units.

New home sales, which comprise about 11.5 per cent of housing market sales, are drawn from permits and tend to be volatile on a month-to-month basis. Sales were up 15.5 per cent from a year ago.

The median new house price fell 8.8 per cent to US$299,400 in September from a year ago. Prices were down 7.9 per cent from the prior month, the biggest decline since September 2014.

The housing market has had mixed fortunes this year despite would-be homebuyers being bolstered by a reduction in interest rates. The Federal Reserve has lowered borrowing costs twice this year to offset headwinds caused by a more than year-long trade war between the United States and China, and slowing global growth.

The 30-year fixed mortgage rate has dropped more than 125 basis points since last November's peak to an average of 3.69 per cent, according to data from mortgage finance agency Freddie Mac.

A report last week showed that single-family home construction rose for a fourth straight month, and building permits also increased. But the housing market continues to struggle with a dearth of properties for sale and annual price growth that has been outpacing wage gains.

Sales of previously owned homes also fell in September as rising prices hurt sales, particularly in the lower-price end of the market, data on Tuesday showed.

New home sales in the South, which accounts for the majority of transactions, edged down 0.2 per cent in September. Sales in the West dropped 3.8 per cent. In the North-east, sales fell 2.8 per cent but there was a jump of 6.3 per cent in the Midwest.

There were 321,000 new homes on the market last month, down 0.6 per cent from August. At September's sales pace it would take 5.5 months to clear the supply of houses on the market, unchanged from August.

About 65 per cent of the houses sold last month were either under construction or yet to be built. REUTERS

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