New residential home sales dropped 5.5 percent in September to a low unseen for nearly two years, according to a new residential sales report released Wednesday by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development (HUD).

Nationwide, new single-family home sales dropped to a seasonally adjusted rate of 553,000 units — a 13.2 percent year-over-year drop from September 2017. The average sales price was $377,200 while the median sales price was $320,000.

Such plunges come somewhat unexpectedly as August saw a home sales growth of 3.5 percent after two months of straight declines.

“Sales activity last month was impacted heavily by declines in the South and West, with Hurricane Florence likely driving the South’s numbers,” Joel Kan, MBA’S AVP of economic and industry forecasts, said in a statement.

“As far as the West is concerned, we have started to see some moderation in home price appreciation in recent months, and this is a further sign that certain markets may be starting to cool off because of affordability challenges.”

Courtesy of HUD

Regionally, year-over-year new-home sales are down 51.3 percent in the Northeast and 15.8 percent in the West. Still, home sales are up in some parts of the country — in September, they grew by 11.4 percent in the South and 4.1 percent in the Midwest.

Along with natural disasters, such numbers could also caused by increasing mortgage rates — the 30-year fixed mortgage rate has grown to an average of 4.85 percent, according to data from Freddie Mac.

“One thing is for certain, the economy cannot grow at a sustainable 3 percent pace for long if new home sales continue to tumble,” Chris Rupkey, chief financial economist at MUFG, told CNBC. “The Fed’s rising interest rates may be more harmful for economic growth than they thought, chiefly because of its effect on long-term interest rates and hence mortgage rates.”

Email Veronika Bondarenko

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Hear from Realogy, Pacaso, SERHANT., Spotify, Redfin, Douglas Elliman, and 100+ more leaders at ICNY.Register now×
Limited time: Get 30 days of Inman Select for $5.SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription