Sales of newly built, single-family homes fell 5.5% in September to a seasonally adjusted annual rate of 553,000 units after downwardly revised August, July and June reports, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

This is the lowest sales report since December 2016. However, on a year-to-date basis, sales are up 3.5% from this time in 2017. 

“New home sales activity has slowed this summer as housing affordability remains a serious issue,” said Randy Noel, NAHB chairman and a custom home builder from LaPlace, La. “However, sales are up from this time last year and builders continue to report consumer interest in housing.”

“Home price gains and rising interest rates are slowing down the housing market, particularly in high-cost areas and among entry-level buyers who are sensitive to price increases,” said NAHB Chief Economist Robert Dietz. “Builders need to provide homes at different price points to address these affordability concerns. Meanwhile, overall job and economic growth should help support the housing market in the months ahead as it adjusts to higher mortgage interest rates.”

A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the September reading of 553,000 units is the number of homes that would sell if this pace continued for the next 12 months.

The inventory of new homes for sale was 327,000 in September. The median sales price was $320,000, down from $331,500 in September 2017, as the market has shifted to lower-cost homes.

Regionally, new home sales rose 6.9% in the Midwest, while sales fell 1.5% in the South, 12% in the West and 40.6% in the Northeast. On a year-to-date basis, home sales are higher in all regions except in the Northeast, which has registered a 16.5% decrease in sales volume.