US new home sales drop in September

Sales of new US single-family homes fell in September, according to data released by the Commerce Department on Wednesday.

New home sales fell 5.5% to a seasonally-adjusted annual rate of 553,000, versus expectations for a level of 625,000. Compared to August's rate - which was revised down to 585,000 from 629,000 - sales were down 13.2%.

Meanwhile, the median price of a new home was $320,000, up from $319,200 in August, and the average sales price came in at $377,200 compared to $384,500.

Ian Shepherdson, chief economist at Pantheon Macroeconomics said the data looks grim but was likely depressed by Hurricane Michael, with a redound on the way.

"The net revision to the previous three months was -55k, so overall this report is much weaker than expected. That said, the September drop likely is due in part to Hurricane Michael, which the consensus seems to have ignored, even though it clearly hit the existing home sales numbers reported last week.

"Reported sales are now well below the pace implied by the lagged mortgage applications numbers so we expect a clear rebound in October and then a spike in November, following August’s brief jump in mortgage applications. But the bigger picture is one of a market under pressure from rising rates and the beginnings of a cyclical tightening in lending standards. Rising inventory is depressing prices; the monthly data are wild but the year-over rate of change in median prices fell to -0.4% in September, the first decline since early 2012."