Washington, D.C., Oct. 27--New home sales edged down in September but nevertheless registered their third-highest level on record.
Sales of previously owned homes scored their best month ever, fresh evidence that the housing market continues to help spur an economic recovery.
The Commerce Department reported Monday that new-home sales came in at a seasonally adjusted annual rate of 1.145 million in September, representing a small, 0.2 percent dip from the previous month.
Even with the drop, the level of sales was stronger than the 1.125 million pace that analysts were forecasting. New-home sales posted their best month ever in June, when they racked up a 1.200 million-unit pace. They turned in their second-best month on record in August, when sales came in at a 1.147 million rate.
In a second report, the National Association of Realtors said that existing-home sales rose by 3.6 percent in September to a seasonally adjusted annual rate of 6.69 million units, the third month in a row that a record-high sales pace was reached.
"These housing results bode extremely well for the economy's year-end finish and the early months of 2004," said economist Ken Mayland, president of ClearView Economics. "This recovery now rests on strong foundations."
On Wall Street, stocks moved higher. The Dow Jones industrials gained 42 points and the Nasdaq was up 12 points at trading around noon time.
Low mortgage rates have helped to keep the housing market healthy throughout the economy's struggle to get back to full strength following the 2001 recession.
The average rate on a 30-year, fixed-rate mortgage in September was 6.15 percent, down from 6.26 percent in August.
Sales of both new and existing homes are on track to set new record highs for all of 2003, economists said.
By region, sales of new homes in September soared by 26 percent in the Northeast to an annual rate of 97,000, and in the West, they jumped by 12.4 percent to a pace of 335,000. But in the Midwest, sales fell 18 percent to a pace of 209,000 and in the South they dipped by 2.5 percent to a rate of 504,000.
For previously owned homes, sales rose 7 percent in the Northeast to a rate of 760,000 units. In the West, sales rose 5.1 percent to a pace of 1.85 million units. Sales in the Midwest went up 4.4 percent to a pace of 1.43 million units, and in the South they rose by 0.8 percent to a pace of 2.64 million units.
"These are terrific numbers. We have excellent mortgage rates and house prices are moving up smartly, keeping the incentive alive to own a home," said David Seiders, chief economist at the National Association of Home Builders.
The average price of a new house sold in September was $256,200, compared with $215,300 in September 2002. The median price of a new home, meanwhile, was $187,400, representing a 5.6 percent increase from the same month a year ago.
For a previously owned home, the national median price in September was $172,300, up 9.1 percent from September 2002. The median price is where half sell for more and half sell for less.
The Federal Reserve is widely expected to hold a main short-term interest rate at 1 percent, a 45-year low, when it meets on Tuesday, economists say. Fed policy-makers have hinted that this rate could stay at near rock-bottom levels for some time, given signs the economy is gaining traction.
By holding rates steady at such low levels, the Fed may be able to spur consumers and businesses may to boost spending and investment, thus lifting economic growth.
The economy grew at a 3.3 percent rate in the second quarter of this year. It may have expanded at a blistering rate of between 6 percent and 7 percent in the third quarter, economists say. The government will release economic growth figures for the third quarter on Thursday.
