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Archive for Saturday, October 27, 2001

Americans put off buying new homes

Sales fall by 1.4 percent to lowest level in a year

October 27, 2001

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— Wary about making big financial commitments, Americans pushed sales of new homes in September down to their lowest point in a year. Rising layoffs and new uncertainties raised by last month's terror attacks darkened the mood of prospective buyers.

New-home sales dropped 1.4 percent to a seasonally adjusted annual rate of 864,000, the lowest level since August 2000, when a rate of 839,000 homes were sold, the Commerce Department reported Friday.

"Many households were probably very reticent in September to make major investment commitments, such as buying a new house," said Lynn Reaser, chief economist for Banc of America Capital Management.

"In many instances, households' attention was focused on the whole chain of events that started on Sept. 11, and they were worried about what might happen next."

Last month's drop came on top of a 2.9 percent decline in new-home sales in August, according to revised figures. The government previously had reported that sales rose 0.6 percent.

The housing market has been a pillar of the ailing economy, but fallout from the Sept. 11 attacks has taken a bite out of sales and is expected to dampen demand in the coming months, economists and builders said.

Still, even with slowing sales, analysts are hopeful that the housing market, aided by low mortgage rates, will continue to be stable.

The average interest on a 30-year fixed rate mortgage in September was 6.82 percent, down from 6.95 percent in August. In September 2000, the rate stood at 7.91 percent.

By region, sales in the Midwest jumped by 21.2 percent to a rate of 177,000.

The Northeast took the biggest hit in September, plunging by 26.6 percent to a rate of 47,000, the lowest level since January 1996 when sales also were at that level.

In the West, sales declined by 8.2 percent to a rate of 224,000, and in the South they fell by 1.4 percent to a rate of 416,000.

The drop in sales pulled home prices down in September. The median sales price, at which half sell for more and half sell for less, was $162,400, a 5.1 percent decline from the month before.

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