Posted by Joseph Y. Calhoun, III

New home sales fell in September:

Sales of new one-family houses in September 2009 were at a seasonally adjusted annual rate of 402,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 3.6 percent (±10.2%)* below the revised August rate of 417,000 and is 7.8 percent (±12.0%)* below the September 2008 estimate of 436,000.

The median sales price of new houses sold in September 2009 was $204,800; the average sales price was $282,600. The seasonally adjusted estimate of new houses for sale at the end of September was 251,000. This represents a supply of 7.5 months at the current sales rate.

Inventory was unchanged while both median and average sales prices rose. With the exception of February, sales have risen every month this year so a slight pullback isn’t a surprise. Part of the drop can probably be explained by the impending expiration of the buyer’s tax credit. It would be hard to sign a contract for a new home in September and expect to close by the end of November. That might also explain the surge in existing home sales in the same month. First time buyer’s who wanted to use the credit almost had to buy an existing home.

The housing market has been approaching normal all year and with inventory of both existing and new homes now at 7 months of supply, the excess inventory is basically gone. Of course that assumes there aren’t a bunch more foreclosures to come, something I’m not willing to say just yet. I do know that we can’t go for very long building just 400,000 houses a year when household formation is well over 1,000,000 per year. At some point in the relatively near future, either prices will rise or we’ll build more houses. Either would be welcome at this point.