New Home Sales Rise, Durable Goods Fall
Sales of new homes scored an unexpected gain in September while orders for large manufactured goods fell unexpectedly.
New home sales rose by 4.8 percent to a seasonally adjusted annual rate of 770,000 units, the Commerce Department reported Thursday. The improvement comes after sales had fallen to the slowest pace in more than a decade.
The rebound was led by a 37.7 percent surge in the West. Sales were also up 0.5 percent in the South. But sales of new homes fell by 19.5 percent in the Midwest and 6.6 percent in the Northeast.
Despite the increase, the housing market remains mired as sales are still 23.3 percent below year-ago levels.
Analysts were predicting a 2.5 percent drop in new home sales from the reported August sales pace of 795,000 homes. But that figure was revised sharply lower Thursday to 735,000, which marks the slowest sales pace in more than a decade.
Median new home prices in September climbed to $238,000, up 2.5 percent from the month before.
Meanwhile, orders for big-ticket goods slipped an unexpected 1.7 percent in September.
The September drop in orders for durable goods reflects weakness in such areas as autos, fabricated metals, computers and electronics products, and electrical appliances.
The drop follows a 5.3 percent plunge the month before; and marks the first time in more than a year that there were back-to-back declines in factory orders.
The consecutive dips are renewing concerns about damage to the economy from a severe housing slump and credit crunch.
A number of recent reports were troublesome for the economy, ranging from a record 8 percent slide in existing home sales to poor earnings reports from banks and investment houses that announced big write-offs and layoffs due to losses in mortgage-backed securities.
Turmoil slammed credit and mortgage markets in August as worries increased over rising mortgage foreclosures. Those worries resulted in a drying up of the availability of so-called jumbo mortgages — loans topping $417,000 — that are particularly important in high-cost areas such as California.
An estimated 2 million subprime mortgages could go into foreclosure within the next 18 months as low introductory loan rates reset much higher, according to a congressional Joint Economic Committee report released Thursday.
The report also said that states will lose $917 million in revenue from property taxes as housing values fall amid the wave foreclosures.
"State by state, the economic costs from the subprime debacle are shockingly high," New York Sen. Charles Schumer, chairman of the JEC said in a statement. "From New York to California, we are headed for billions in lost wealth, property values and tax revenues."
Schumer called on the Bush administration to more aggressively help families find ways to avoid going into default on their home loans.
From NPR reports and The Associated Press
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