Washington, October 27--New home sales rose more than expected in September, as low mortgage rates continued to fuel the housing industry throughout most of the U.S.
New home sales rose 3.5% to a 1.206 million annual rate during September--the third-highest pace on record, the Commerce Department reported. August sales were revised downward to a rate of 1.165 million, a 5.8% gain from July.
Previously, August new home sales were reported at a 1.184 million pace.
Economists polled by Dow Jones Newswires and CNBC had expected a modest decline in September new home sales to an annual rate of 1.150 million. Low mortgage rates have continued to support the housing sector of the U.S. economy, even as the labor market recovery has been weak and high oil prices have sapped buying power. A report by the National Association of Realtors Tuesday surprised markets by showing that sales of previously owned homes rose 3.1% to a 6.75 million annual rate.
In September, the average rate on a 30-year mortgage was 5.75%, down from 5.87% in August and 6.15% in September 2003. Changes in interest rates tend to impact new home sales more immediately since those numbers are reported when the contract is signed. Existing homes are reported once the sale is completed.
September new home sales were up in all U.S. regions except the West, where sales were down 0.8%. Sales were up 6.0% in the Northeast, and up 12.3% in the Midwest. In the South, sales were up 2.7%.
Strong demand pushed the inventory of homes on the market to a 4.1 months supply, down from 4.2 months in August. May's inventory was 4.3 months.
Average and median home prices fell last month with median prices dropping to $197,700 from $215,900 in August and the average price of a new home falling to $255,100 from $269,300. An estimated 93,000 homes were actually sold in September, down from 102,000 in August, based on figures not seasonally adjusted.
