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New home sales rise more slowly than expected

Sales of new U.S. homes rose more slowly than expected in September, while the number of new houses on the market hit a record and median prices fell, according to a government report Thursday that could signal cooling in the housing boom.
A worker sets a window sill on a new home under construction in South Russell, Ohio last month. On Thursday, the government reported sales of new U.S. homes rose more slowly than expected in September.
A worker sets a window sill on a new home under construction in South Russell, Ohio last month. On Thursday, the government reported sales of new U.S. homes rose more slowly than expected in September.Amy Sancetta / AP
/ Source: Reuters

Sales of new U.S. homes rose more slowly than expected in September, while the number of new houses on the market hit a record and median prices fell, according to a government report Thursday that could signal cooling in the housing boom.

The Commerce Department said new single-family home sales rose 2.1 percent last month to a seasonally adjusted annual rate of 1.222 million units from 1.197 million unit pace in August — a sharp downward revision. New home sales were revised lower for June and July as well.

The September sales pace was 0.1 percent slower than a year ago.

Economists had expected new home sales to rise to a 1.250 million unit pace from August’s originally reported 1.237 million unit pace.

The Commerce Department said Hurricane Katrina had a minimal impact on new residential sales for September.

While sales rose, the supply of homes available for sale shot up to a record 493,000 at the end of September, surpassing August’s high of 478,000. At September’s sales pace, that represented a 4.9 months’ supply.

The median home sales price fell 5.7 percent to $215,700.

Low mortgage rates have sustained a years-long rally in the U.S. housing sector, but recent data have begun to suggest some cooling in the market. Earlier this week, a trade group said home re-sales came in flat in September but would have been lower if not for aggressive buying around hurricane-impacted areas.

On Wednesday, the Mortgage Bankers Association said mortgage applications fell last week to a six-month low.

Interest rates, too, have begun to climb after largely ignoring rising short-term borrowing costs. The rate on the 30-year mortgage loan, considered the industry benchmark, averaged 6.06 percent last week, up from a 2005 low of 5.47 percent in June, according to the Mortgage Bankers Association. A year ago, the 30-year mortgage averaged 5.54 percent.

Regionally, new home sales in September jumped 24.9 percent in the Midwest and 5.6 percent in the South. But sales tumbled 20 percent in the Northeast and 11.8 percent in the West - the regions that have posted the double-digit home price appreciation that many economists think is unsustainable.