New Home Sales Fall 3.6%

Sales of new homes dropped unexpectedly last month as the effects of the soon-to-expire current tax credit for first-time buyers started to wane.

The Commerce Department said sales fell 3.6% to a seasonally adjusted annual rate of 402,000 from a downwardly revised 417,000 in August. Economists surveyed had expected a pace of 440,000.

It was the first decline since March. Sales in September were down 7.8% from a year ago.

A measure to extend the soon-to-expire $8,000 tax credit for first time homebuyers has passed in the Senate, which is part of a bill that also extends unemployment benefits.

For the first time, the legislation that was recently cleared makes move-up buyers as well as first-time buyers eligible for a credit.