New Home Sales Fall First Time Since March

Washington, DC, Oct. 28, 2009--Sales of new homes dropped unexpectedly in September as the effects of a soon-to-expire tax credit for first-time owners started to wane.

The Commerce Department says sales fell 3.6 percent to a seasonally adjusted annual rate of 402,000 from a downwardly revised 417,000 in August. Economists  had expected a pace of 440,000.

Sales of new homes make up less than 10 percent of the market.

Contracts signed last month will probably not be able to close before an $8,000 first-time homebuyer tax credit expires at the end of November.

It was the first decline since March. Sales in September were down 7.8 percent from a year ago.

The median sales price of $204,800 was off 9.1 percent from $225,200 a year earlier, but up 2.5 percent from August's level of $199,900.

Builders had 251,000 houses on the market last month, the fewest since November 1982. It would take 7.5 months to sell all homes at the current sales pace, the same as in August.