Housing Bounces Back in September

Don Hogsett, November 1, 2004

The broad U.S. housing market perked up in September after taking a breather the month before, with two of three key components recording strong gains, and only housing starts declining.

Reversing a slide the month before, sales of existing homes, which accounts for almost 70 percent of all housing activity, climbed 3.1 percent to a seasonally adjusted level of 6.8 million units. Sales of existing homes are now down just 2.5 percent from a 13-month high of 6.9 million units in June, and are 10 percent above a low of 6 million units in January.

David Lereah, chief economist of the National Association of Realtors, said historically low interest rates translated into last months bump in sales. “The good news is that interest rates have been fairly stable over the past month, hovering near generational lows, increasing the purchasing power of buyers trying to get into the housing market.”

Winning back some of August's deep 6.4 percent slide, sales of new homes advanced 3.5 percent, to a seasonally adjusted level of 1.2 million units. But even with the September gain, the highly volatile market for costly new homes was still down 5 percent from a 13-month high of 1.3 million units sold in March.

The most forward-looking indicator, housing starts, lost ground in September, slipping 6 percent, as unusually wet weather conditions across much of the country slowed the pace of home building.

“Builders would have started more homes last month, but just took a rain-check in a lot of cases,” said Bobby Rayburn, president of the National Association of Home Builders. “In fact, given all the weather-related issues in September, today's report is pretty encouraging. We're in good shape heading into the fourth quarter.”

Looking even further out, the level of building permits for single-family homes held firm, and permits for multi-family units jumped 8.2 percent. Regionally, every part of the nation reported gains in permits, except for the West, which showed a modest 1.3 percent decline.

Housing By Region
Month-To-Month % Change

Source: U.S. Department of Commerce and National Association of Realtors
Northeast 4.1% -26.9% 6.0%
Midwest 3.7 -4.6 12.3
South -0.7 -1.0 2.7
West 7.8 -7.9 -0.8

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