September new home sales beat forecasts at 676,000 annualized

• The prior month's reading was revised down to an annualized 680,000 from the initial 684,000.

Details:

• The seasonally adjusted annualized sales pace for new homes stood at 676,000, compared with 680,000 in August.

• Month-over-month sales slipped 0.6%, and year-over-year they were down 5.3%.

• Inventory of new homes for sale totaled 476,000 units, down from 481,000 in August and 2.3% lower than a year ago.

• The months' supply, a measure of how long it would take to sell all homes at the current pace, eased to 8.4 months from 8.5 months in August but remained above the 8.2 months seen last September.

• The median new home sale price rose to $400,400, up 3.9% from August but also 3.9% below the year-earlier level.

• The average sales price edged up to $472,800, a 0.4% monthly gain, though it remained 6.7% lower than a year ago.

Regional data showed increases in the Northeast and West were canceled out by losses in other parts of the country.

New home sales varied by region in September. Gains in the Northeast and West offset declines in the larger South and the Midwest. The following figures are seasonally adjusted annual rates.

Compared with August, regional sales changed as follows:

• Northeast sales rose to 32,000 from 25,000, a monthly increase of 28.0%.

• Midwest sales fell to 89,000 from 96,000, down 7.3%.

• South sales dropped to 413,000 from 442,000, a 6.6% decline.

• West sales climbed to 142,000 from 117,000, up 21.4%.

Year-over-year comparisons for September showed:

• Northeast: 32,000 versus 29,000 a year earlier, up 10.3%.

• Midwest: 89,000 versus 97,000, down 8.2%.

• South: 413,000 versus 416,000, a 0.7% drop.

• West: 142,000 versus 172,000, down 17.4%.

The South was the main factor in the monthly decline, with its annualized sales pace dropping by 29,000. That was more than the 25,000 gain in the West, while the Northeast's increase equaled the Midwest's fall.

Looking at the year-over-year data paints a different picture. The West contributed 30,000 of the 38,000 drop in the national sales pace versus a year earlier. The region's sharp monthly improvement in September was therefore only a partial recovery, as sales remained significantly below last September's level.

It is worth noting that regional estimates are subject to significant volatility.

Overall, the data showed a slight softening.

According to the Census Bureau and HUD, the seasonally adjusted annual pace of new home sales inched down to 676,000 in September from 680,000 in August, and was 5.3% under the year-ago figure.

Inventory also decreased, with 476,000 homes up for sale. That nudged the supply figure to 8.4 months, still above the 8.2 months from a year ago. While builders have fewer homes available than last September, the slower sales rate means the supply relative to demand is larger.

The median price recovered 3.9% from August to $400,400, but both median and average prices were still lower than a year earlier. This monthly price increase should be viewed with caution, as shifts in the composition of homes sold can affect these numbers without reflecting similar moves in fundamental home values.

A quick take on the data: demand appears subdued, with ample inventory relative to sales. This may push builders to compete on price and incentives and could curb their enthusiasm for ramping up construction. The monthly price gain provides some counterbalance, but it does not indicate a return to pricing power.

On the margins, weaker housing data could contribute to lower Treasury yields and pressure the dollar. However, both the monthly and annual declines in sales are within the report's margins of error, so the signal from this single release is not particularly strong.

The new home sales report tracks contracts signed for newly built single-family homes, typically when a contract is signed or a deposit taken. The headline figure is seasonally adjusted and annualized, representing the implied yearly pace based on monthly activity, not actual sales for the month. Traders watch this data for signals on housing demand, construction trends, and the economy's responsiveness to interest rates.