By Josh Boak ,AP
October 25, 2014, 12:01 am TWN
WASHINGTON -- U.S. sales of new homes were essentially flat in September, after the government sharply revised downward what was initially an August surge in buying.
New-home sales edged up 0.2 percent last month to a seasonally adjusted annual rate of 467,000, the Commerce Department reported Friday. The report also revised down the August sales rate to 466,000 from 504,000.
The pace of sales for newly built homes has improved a mere 1.7 percent so far this year compared to 2013. Only the South has experienced gains in buying year-to-date, while purchases have fallen in the Northeast, Midwest and West.
Housing has struggled to fully rebound since the recession ended more than five years ago. Many potential buyers lack the savings and strong credit history needed to afford a home, causing them to rent or remain in their existing houses instead of upgrading.
Construction and buyers of new homes have trickled back from the worst of the bust, but new-home sales remain drastically below the annual rate of 700,000 during the 1990s.
Sales in the most expensive Western states declined in September, reversing some of the gains made in August. Because homes are pricier in the West, that pushed down the median price for a new home to US$259,000 from US$286,800 in the prior month.
Some of the financial pressures on homebuyers are starting to ease, yet it's unlikely that will boost sales of new homes in the final months of this year.
Over the past two weeks, federal regulators have unveiled plans to loosen down payment requirements, and mortgage rates have tumbled below 4 percent. Along with a slowdown in price growth, these factors could eventually help usher more buyers into the real estate market.
Average rates for a 30-year mortgage fell to 3.92 percent from 3.97 percent last week, the mortgage company Freddie Mac reported. That is the lowest level since June 2013 and marks a solid decline from average rates that began the year at 4.53 percent. When rates fall, it becomes cheaper for people to borrow and makes homes more affordable.
But many potential buyers are unable to upgrade to a new home by selling their current home, as prices still have yet to exceed mortgage debt for much of the country.
More than 8 million homes are “seriously underwater,” representing 15 percent of all properties with a mortgage and roughly US$1.4 trillion worth of negative equity, according to the housing data company RealtyTrac. The lasting damage from the housing bust continues to weigh on the market, preventing some homeowners from upgrading to larger houses and limiting the options of buyers.
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