New-home sales close to flat in September

WASHINGTON — U.S. sales of new homes were nearly flat in September, after the government sharply revised downward what was initially an August surge in buying.

New-home sales edged up 0.2 percent last month to a seasonally adjusted annual rate of 467,000, the Commerce Department reported Friday. The report also revised down the August sales rate to 466,000 from 504,000.

The pace of sales for newly built homes has improved a mere 1.7 percent so far this year compared to 2013. Only the South has experienced gains in buying year-to-date, while purchases have fallen in the Northeast, Midwest and West.

Housing has struggled to fully rebound since the recession ended more than five years ago. Many potential buyers lack the savings and strong credit history needed to afford a home, causing them to rent or remain in their existing houses instead of upgrading.

Construction and buyers of new homes have trickled back from the worst of the bust, but new-home sales remain drastically below the annual rate of 700,000 during the 1990s.

Sales in the most expensive Western states declined in September, reversing some of the gains made in August. Because homes are pricier in the West, that pushed down the median price for a new home to $259,000 from $286,800 in the prior month.

Analysts noted that the new-home sales report from the government is notoriously volatile from month to month, yet sales have basically been stuck in place for the past few years.

“There is little evidence that the new single-family housing market is decisively breaking out of its medium-term flat pattern,” said Joshua Shapiro, chief U.S. economist at the forecasting firm MFR.

Some of the financial pressures on homebuyers are starting to ease, yet it’s unlikely that will do much to suddenly boost sales of new homes in the final months of this year.

Over the past two weeks, federal regulators have unveiled plans to loosen down payment requirements, and mortgage rates have tumbled below 4 percent. Along with a slowdown in price growth, these factors could eventually help usher more buyers into the real estate market.

Average rates for a 30-year mortgage fell to 3.92 percent from 3.97 percent last week, the mortgage company Freddie Mac reported. That is the lowest level since June 2013 and marks a solid decline from average rates that began the year at 4.53 percent. When rates fall, it becomes cheaper for people to borrow and makes homes more affordable.

But many potential buyers are unable to upgrade to a new home by selling their current home, as prices still have yet to exceed mortgage debt for much of the country.

More than 8 million homes are “seriously underwater,” representing 15 percent of all properties with a mortgage and roughly $1.4 trillion worth of negative equity, according to the housing data company RealtyTrac. The lasting damage from the housing bust continues to weigh on the market, preventing some homeowners from upgrading to larger houses and limiting the options of buyers.

Builders have yet to meaningfully ramp up construction of single-family houses.

Almost all of the 6.3 percent growth in housing starts last month came from apartments and multi-family construction, the Commerce Department reported. Starts for single-family houses rose just 1.1 percent in September compared to the prior month.

Increased apartment construction reflects a broader shift toward renting. Many would-be buyers endured the loss of their financial savings and potentially their jobs during the recession. As wages have barely surpassed inflation during the recovery, a broad swath of Americans lack the income needed to buy a house.

The troublesome housing landscape has created a paradox: It’s ostensibly cheaper to own for the time-being but more people are stuck renting, according to an analysis from the real estate data firm Trulia. A recent report by the firm found that current mortgage rates have made it 38 percent cheaper to buy a home rather than renting, based on a seven-year timeframe.

“Consumers tell us that the main obstacle to homeownership is the down payment,” said Jed Kolko, chief economist at Trulia in the report. “For those would-be homeowners —especially first-timers without savings or equity from another home — a low-down-payment mortgage might be the only option.”

Federal regulators have announced plans this month to lower the down payment requirements for some Fannie Mae and Freddie Mac programs to 3 percent from 5 percent.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

Black Press Media operates Sound Publishing, the largest community news organization in Washington State with dailies and community news outlets in Alaska.
Black Press Media concludes transition of ownership

Black Press Media, which operates Sound Publishing, completed its sale Monday (March 25), following the formerly announced corporate restructuring.

Maygen Hetherington, executive director of the Historic Downtown Snohomish Association, laughs during an interview in her office on Thursday, Feb. 15, 2024, in Snohomish, Washington. (Ryan Berry / The Herald)
Maygen Hetherington: tireless advocate for the city of Snohomish

Historic Downtown Snohomish Association receives the Opportunity Lives Here award from Economic Alliance.

FILE - Washington Secretary of State Steve Hobbs poses in front of photos of the 15 people who previously held the office on Nov. 22, 2021, after he was sworn in at the Capitol in Olympia, Wash. Hobbs faces several challengers as he runs for election to the office he was appointed to last fall. (AP Photo/Ted S. Warren, File)
Secretary of State Steve Hobbs: ‘I wanted to serve my country’

Hobbs, a former Lake Stevens senator, is the recipient of the Henry M. Jackson Award from Economic Alliance Snohomish County.

Mark Duffy poses for a photo in his office at the Mountain Pacific Bank headquarters on Wednesday, Feb. 14, 2024 in Everett, Washington. (Annie Barker / The Herald)
Mark Duffy: Building a hometown bank; giving kids an opportunity

Mountain Pacific Bank’s founder is the recipient of the Fluke Award from Economic Alliance Snohomish County.

Barb Tolbert poses for a photo at Silver Scoop Ice Cream on Thursday, Feb. 29, 2024 in Arlington, Washington. (Annie Barker / The Herald)
Barb Tolbert: Former mayor piloted Arlington out of economic brink

Tolbert won the Elson S. Floyd Award, honoring a leader who has “created lasting opportunities” for the underserved.

Photo provided by 
Economic Alliance
Economic Alliance presented one of the Washington Rising Stem Awards to Katie Larios, a senior at Mountlake Terrace High School.
Mountlake Terrace High School senior wins state STEM award

Katie Larios was honored at an Economic Alliance gathering: “A champion for other young women of color in STEM.”

The Westwood Rainier is one of the seven ships in the Westwood line. The ships serve ports in the Pacific Northwest and Northeast Asia. (Photo provided by Swire Shipping)
Westwood Shipping Lines, an Everett mainstay, has new name

The four green-hulled Westwood vessels will keep their names, but the ships will display the Swire Shipping flag.

A Keyport ship docked at Lake Union in Seattle in June 2018. The ship spends most of the year in Alaska harvesting Golden King crab in the Bering Sea. During the summer it ties up for maintenance and repairs at Lake Union. (Keyport LLC)
In crabbers’ turbulent moment, Edmonds seafood processor ‘saved our season’

When a processing plant in Alaska closed, Edmonds-based business Keyport stepped up to solve a “no-win situation.”

Angela Harris, Executive Director of the Port of Edmonds, stands at the port’s marina on Wednesday, Jan. 24, 2024, in Edmonds, Washington. (Ryan Berry / The Herald)
Leadership, love for the Port of Edmonds got exec the job

Shoring up an aging seawall is the first order of business for Angela Harris, the first woman to lead the Edmonds port.

The Cascade Warbirds fly over Naval Station Everett. (Sue Misao / The Herald file)
Bothell High School senior awarded $2,500 to keep on flying

Cascade Warbirds scholarship helps students 16-21 continue flight training and earn a private pilot’s certificate.

Rachel Gardner, the owner of Musicology Co., a new music boutique record store on Thursday, Jan. 18, 2024 in Edmonds, Washington. Musicology Co. will open in February, selling used and new vinyl, CDs and other music-related merchandise. (Olivia Vanni / The Herald)
New Edmonds record shop intends to be a ‘destination for every musician’

Rachel Gardner opened Musicology Co. this month, filling a record store gap in Edmonds.

MyMyToyStore.com owner Tom Harrison at his brick and mortar storefront on Tuesday, Sept. 6, 2022 in Everett, Washington. (Olivia Vanni / The Herald)
Burst pipe permanently closes downtown Everett toy store

After a pipe flooded the store, MyMyToystore in downtown Everett closed. Owner Tom Harrison is already on to his next venture.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.