Rise in New-Home Sales Offset by Revisions

New-home sales jumped 5.3% in September, following a 3.6% increase in August, but downward revisions in the government's sales tallies raise questions about the strength of the rebound.The U.S. Census Bureau reported that sales of new single-family homes rose from a seasonally adjusted annual rate of 1.02 million in August to 1.08 million in September. However, large downward revisions for the previous three months erased 67,000 previously reported sales, more than offsetting the 54,000 sales jump in September. Wachovia economic analyst Phillip Neuhart said the revisions "show how accelerated the decline in sales has been." He believes the downward trend is beginning to flatten out. However, he said he would not be surprised to see more downward revisions in the sales data due to cancellations of sales contracts. The "good news" is that inventories declined, Mr. Neuhart said, from a 6.8-month supply to a 6.4-month supply. "Builders are heavily incentivizing their sales, which is one reason they are able to clear inventories," he said. A National Association of Home Builders survey shows that 75% of builders are offering concessions to entice buyers, and these offers of upgraded kitchens or free closing costs average about 5% of the house price.