Sales of new houses on rise; median price down 9.7%

New-home sales in the U.S. unexpectedly rose for a second month in September as builders focused on meeting demand for cheaper homes, but a surge in demand for dwellings in the $150,000-to-$200,000 range drove the median price of a new home down 9.7 percent from a year ago, the most since 1970.

The median price of a new home declined to $217,100 in September from $240,400 a year earlier, Thursday's report showed. It was the biggest decrease since an 11.2 percent year-over-year drop in December 1970, the Commerce Department said. The median price was the lowest since $211,600 in September 2004.

Sales rose in two of four regions. They increased 24 percent in the West to 280,000, and 6.9 percent in the South to 603,000. They fell 35 percent in the Northeast to 57,000, and 6.3 percent in the Midwest to 135,000.

In the most recent report on local home sales, September prices in the Puget Sound area had increased 9.4 percent in the previous year, the first single-digit appreciation in two years, and the number of pending sales — deals signed but not closed — declined almost 19 percent compared with a year earlier.

The local numbers were reported by the Northwest Multiple Listing Service, which tracks home sales in 17 Washington counties. The report also showed that more homes were for sale, and they were selling more slowly.

Inventories also declined. The number of homes for sale dropped to a seasonally adjusted 557,000 during the month, the lowest since March. The supply of homes at the current sales rate declined to 6.4 months' worth from 6.8 months. The number of homes that are completed and waiting to be sold rose by 6,000 to 157,000 in September, Thursday's report showed.

Sales of new homes are still down 14 percent from the same time last year, the Commerce Department said.

Lending rates have declined in recent months. The average 30-year fixed mortgage rate fell to 6.36 percent last week from 6.8 percent in late July, according to Freddie Mac, the second-largest buyer of U.S. mortgages.

A report Wednesday from the National Association of Realtors showed sales of previously owned homes declined last month to the lowest level in almost three years.

Economists say the government's new-home sales data, recorded when a contract is signed, are a better leading indicator of the real-estate market than the Realtors statistics. Most existing home sales are recorded when a contract closes, and reflect buying decisions made months earlier.

The Realtors forecast a 17.3 percent drop in new-home sales this year to 1.06 million, still the fourth-highest on record.

Pulte Homes, the largest U.S. homebuilder by market value, said Wednesday that its third-quarter earnings slumped 52 percent as a flood of unsold homes showed no signs of abating.

"The operating landscape for new-home sales remained challenging during the third quarter," Richard Dugas Jr., Pulte's chief executive officer, said in the statement. He cited high inventory levels, affordability issues and elevated cancellation rates, and said "a general lack of buyer confidence continued to weigh on new-home demand."

The Commerce Department's new-homes report Thursday suggests that builder incentives, lower mortgage interest rates and discounts will keep this year's housing slowdown from deepening.

The figures, combined with a separate report showing more business spending on durable goods, are consistent with the Federal Reserve's prediction Wednesday of a "moderate" economic expansion after it announced its benchmark interest rate would stay at 5.25 percent.

In other economic news, the government said that orders to U.S. factories for big-ticket manufactured goods, powered by a huge jump in demand for commercial jetliners, soared last month by the largest amount in more than six years.

For September, transportation orders rose by 27.6 percent as the big jump in demand for commercial aircraft offset a 6.1 percent drop in orders to automakers, who have been struggling recently under the impact of weak sales of trucks and sport utility vehicles.

The rise in commercial airplane orders had been expected, given that Boeing booked new orders for 175 planes, up from 30 in the previous month.

The Commerce Department reported that orders for durable goods rose by 7.8 percent last month to $226.7 billion. The increase followed two months of declines and was the biggest gain since June 2000.

Material from Seattle Times staff and The Associated Press was used in this report.