Sales of previously owned homes in the US hit their lowest level since 1999 and single family homes suffered the biggest price drop on record in October.
Home sales dropped 1.2 per cent, more than forecast, to an annual rate of 4.97m, from 5.03m in September, the National Association of Realtors said. Sales were down 20.7 per cent from a year earlier. The level of sales hit its lowest since the NAR started tracking single-family and condominium sales in 1999.
Single-family home prices fell 6.3 per cent from a year earlier, the worst performance recorded since the data begin in 1969.
The NAR said the lower price was partly because of difficulties in the market for mortgages above $417,000, known as “jumbo” loans, that slowed sales in high-price markets.
The report comes after the closely-watched Case-Shiller index on Tuesday indicated that house prices had fallen by the most in at least two decades in the third quarter of the year.
“We estimate seasonally-adjusted prices have fallen at an annualised rate of nearly 17 per cent in the three months to October compared to the previous 3 months,” said Ian Sheperdson of High Frequency Economic. “With inventory so massive, prices will keep falling.”
New orders for manufactured goods also came in weaker than expected and at their lowest level since February, as business investment appeared to weaken.
Durable goods orders fell 0.4 per cent whereas economists had expected a 0.1 per cent fall.
Excluding transportation, orders were down even more sharply, by 0.7 per cent.
“The drop does raise the risk that we are seeing some pull-back in confidence by businesses in October, but we would need further weakness in November and December for this downswing to prove significant,” wrote economists at Action Economics.
Non-defence new orders for capital goods excluding aircraft, a measure of business investment, fell 2.3 per cent, the biggest drop since February. Most of the fall in non-defence capital goods orders came from a 15.6 per cent drop in orders for computers and related products and a 22.6 per cent fall in communications equipment orders.
“The drop in communications equipment orders accounts for all the 2.3% drop in non-defence capital goods orders ex-aircraft; the trend here is flat but no worse than that, at least not yet,” said Ian Shepherdson of High Frequency Economics.