New-home sales in September tacked on 4.8%, while a revision of August sales deducted 7.5% from that month's original report. Sales of new homes in September marked a seasonally adjusted annual rate of 770,000, higher than economists' predictions of 758,000. Previously, August sales were reported at 795,000, but have since been revised to 735,000, marking an 11-year low.
Sales of new homes have plunged 23.3% from the year-ago period. The numbers are most likely lower, though, as home builders have reported staggering numbers in cancelled contracts which are not reported in government data. (Real estate reports only record the signing of contracts, not the closings.)
Inventories of new homes on the market eroded to 523,000, a 1.5% decline, while new construction of single-family homes unraveled a dramatic 31% from a year earlier. As a result, the median sales price for a home was up 5% from a year ago, hitting $238,000. As with the new-home sales reports, the government doesn't record all aspects of the median sales price, including the massive incentives home builders must offer to attract buyers.
In related news, the Joint Economic Committee estimated that if the credit crunch continues to weaken the economy, the U.S. could see up to 2 million subprime-mortgage foreclosures by 2009. If the prediction rings true, the states would lose approximately $917 million in property tax revenue.
Yesterday's diminishing existing-home sales report, with the help of players like Merrill Lynch (MER) and Amazon.com (AMZN), helped tumble the Dow Jones Industrial Average nearly 200 points during intraday trading.