New US home sales fall in September

There were concerns over a recovery in the US housing market today after the Commerce Department revealed a fall in the annual rate of US new home sales in September.

According to the Commerce Department, new single-family home sales dived by 3.6% to a seasonally adjusted annual rate of 402,000 homes, down from a revised 417,000 units in August.

It was the first fall in six months and the figures came as a surprise to many analysts.

The median sales price of $204,000 (£124,000) was down by 9.1% from $225,200 a year ago.

Following the news, Wall Street opened lower which then led to a fall in London with the FTSE 100 falling 113.67 points to 5,087.30.

According to some analysts, the US housing market is being propped up by the $8,000 tax credit for first-time buyers, which was introduced by the Government to boost demand for houses.

Commenting on the figures, Bernard Markstein at the National Association of Home Builders, said they “demonstrate the power of the first-time home buyers tax credit”.

“We just haven’t got the economy back to the point where we can step back and say the housing market doesn’t need any more support,” added Mr Markstein.

The tax credit is due to expire at the end of next month and according to Brad Hunter at real estate research firm Metrostudy if the deadline is not extended, then the “pullback could be quite significant.”

The figures come just a day after it was revealed that US consumer confidence took a dive in October after the closely-monitored Consumer Confidence Index from the Conference Board fell to 47.7 from a revised 53.4 in September.

It is the second time in two months that the index has fallen and analysts were surprised by the fall after they were expecting the reading to stay the same or to rise slightly.

The index still remains far away from the 90 points required to show that the world’s largest economy is on solid footing.

Figures tomorrow will reveal if the US economy has exited recession.

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