Wednesday morning, the Commerce Department released its report on new home sales in the month of September, showing that sales of new one-family houses unexpectedly decreased compared to the previous month.
The report showed that new home sales fell 3.6 percent to an annual rate of 402,000 in September from the revised August rate of 417,000. Economists had expected sales to increase to 440,000 from the 429,000 originally reported for August.
Peter Boockvar, equity strategist for Miller Tabak, said, "The level is a 3 month low and since its a measure of contract signings of new homes, a closing by the November 30th home buying tax credit deadline is cutting it close and thus may have dissuaded some from buying."
With the unexpected decrease, which came on the heels of five consecutive monthly increases, new home sales were down 7.8 percent compared to the same month a year ago.
Boockvar said, "Since 85% of homes purchased by first time buyers who collected the tax credit were going to buy a home anyway, all the $8,000 tax credit did was pull demand forward, thus making the data over the summer very artificial in nature."
"The tax credit may get extended but the taxpayer cost is certainly not worth the benefit," he added.
New home sales in the South and the West showed notable decreases, falling by 10.0 percent and 10.6 percent, respectively. The decreases more than offset a 34.0 percent increase in new home sales in the Mid-west, while sales in the Northeast were unchanged.
The report also showed that the estimate of new houses for sale at the end of September was 251,000, down 3.8 percent from 261,000 at the end of August.
While inventories were down from the previous month, the months of supply at the current sales rate was unchanged at 7.5 months due to the slowdown in the rate of sales.
The Commerce Department also said that the median sales price of new houses sold in September was $204,800, up 2.5 percent from August but down 9.1 percent year-over-year. The average sales price was $282,600, up 10.2 percent from August but down 1.6 percent from a year ago.
Last Friday, the National Association of Realtors released a report showing that existing home sales increased by much more than expected in the month of September, with first-time home buyers driving sales up to their highest level in over two years.
The report showed that existing home sales jumped 9.4 percent to an annual rate of 5.57 million units in September from a 5.10 million unit rate in August. Economists had been expecting a more modest increase to a 5.35 million unit rate.
With the bigger than expected increase, exiting home sales activity rose to its highest level since reaching a 5.73 million unit rate in July of 2007.
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May 22, 2026 14:46 ET Minutes of the latest Fed policy session was the highlight of the week along with survey data on the U.S. housing market. In Europe, survey data signaled the trends in the euro area private sector. Further, consumer price inflation data from the U.K. was in focus. In Asia, various economic indicators from China drew attention to the health of the economy.