New Home Sales Surge in September

WASHINGTON D.C. - New home sales rose 3.5 percent last month to a seasonally adjusted annual rate of 1.21 million units, the third highest level on record behind the record rate of 1.27 million set in March and a rate of 1.25 million in May, the Commerce Department reported Wednesday.

?EUR??,,????'??With long-term mortgage rates below 6 percent and adjustable rate mortgages around 4 percent, buyers have had a powerful incentive to buy and we expect robust sales to continue in the coming months,?EUR??,,????'?? said Bobby Rayburn, president of the National Association of Home Builders (NAHB). ?EUR??,,????'??The latest NAHB/Wells Fargo Housing Market Index, based on our monthly surveys of single-family builders, indicated that builders saw a large turnout of prospective buyers at model homes and sales centers in October.?EUR??,,????'??

The strength in new home sales reflected strength in all regions of the country except the West, where sales dropped 0.8 percent in September to an annual rate of 358,000 homes. Sales were up 12.3 percent in the Midwest to an annual rate of 238,000 units and posted a 6 percent increase in the Northeast to an annual rate of 71,000 units.

Sales in the South, where activity was held back by a string of hurricanes, rose by 2.7 percent to an annual rate of 539,000 units.

The median price for a new home - the midpoint where half the homes sold for more and half for less - dropped to $197,700 in September, down 8.4 percent from the August median price of $215,900.

Home sales have been powered by continued low mortgage rates. The average monthly rate on a 30-year mortgage in September was 5.75 percent, down from 5.87 percent in August and 6.15 percent in September a year ago. Last week rates on 30-year mortgages averaged 5.69 percent, the lowest level seen in six months.

?EUR??,,????'??Economic conditions - low mortgage rates, healthy income and employment growth and solid house price performance - continue to invigorate demand,?EUR??,,????'?? said NAHB Chief Economist David Seiders. ?EUR??,,????'??We certainly remain on track to have another record year in 2004.?EUR??,,????'??