New home sales rose in September after four straight months of decline, hitting a six-month low in August. According to the Commerce Department, the sale of new homes in September rose by 5.7% to a seasonally adjusted annual rate of 313,000 homes. Sales of new homes rose by 11.2% in the South and 9.7% in the West. However, they fell by 4.2% in the Northeast and 12.2% in the Midwest. There were 163,000 new homes for sale in September, which is a record low.
The driving force behind the rise in the sale of new homes is the decrease in price. The median price for a house fell 3.1% to $204,000. Builders have decreased prices because there is not as much demand for new homes. The median price for a house was the lowest since October 2010. This decrease in new home prices is great news for those looking to buy a new home. But it is bad news for builders, and a sign that the economy is hurting.
New home builders are trying to keep up by selling older homes. Foreclosures and short sales (when lenders negotiate and accept less than what a house is worth) are selling at an average discount of 20%. These types of homes also lower the value of other homes in the neighborhood. This means that it is easier to sell an older home than a new one, and there is a 30% disparity in prices. New home projects in September started at the fastest pace in seventeen months.
New-Home Sales on the Way Up!
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