U.S. Needs Some Home Improvement

Why new home sales dropped in September.
4:27 | 10/24/14

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Transcript for U.S. Needs Some Home Improvement
Okay. It's Friday October 24 the markets and new Yorker open in a big number today 470000. That. Yes and number of new home sales for the month of September. So some home improvement needed in the US housing market has slowed down a bit that report current from the Department of Commerce due out within an hour. Everyone I'm Dan Cutler in New York's you're the details this Friday morning market analyst Scott camp from thestreet.com Scott Good Friday to you. So how much is the number doubt that in the month of August well you know the F. Demand for September's about 470000. Compared to 504000. In August that's about a 7% decline and you know the home builders. Are really grappling with a lot of issues they don't want to get themselves into a situation where they're building too many homes. And then they can sell them so that's why we're seeing some a bit of a decrease. The put this into perspective than seasonally that is is typically a slowdown time of the year. Well look I mean you have a lot ambitious first of all that the summer was always a slow down so we should be seeing a little bit a pent up demand we're not seeing that but. Just broadly speaking I mean do you go back to the ninety's we saw 700000. Per month in terms of new homes so this is just a level that. Is still below where it should be. Is there one particular driving factor than from all of this. Well I think it really comes down to a lack of wage growth I mean the Bureau of Labor Statistics said that average hourly earnings. Rose 2% over the past year but the inflation rate is at one point 7%. So if people aren't making enough money or they're not seeing. Increases in their salaries will the last thing they're gonna do is buy a home plus one of the biggest barriers to home ownership remains. Paying for making that down payment so that's a really daunting task for people to save up for and so if you're not seeing increases in your salary he can't. Say for a down payment either so that's causing problems as well. A break it and really mean a sock from those that are looking to buy a home or that are trying to sell their home. Really this is a larger economic indicator of some pretty good big significance. It really is I mean when you think about. The process of building a home I mean the contractors benefit the appliance industry benefits and then for consumers when you buy that home. The agony of furniture you need all these things you're spending a lot of money that trickles down throughout the entire economy and for not seeing new homes being built. Well than those industries are going to be heard again everyone is very cautious since the recession because what happened before the recession. We have does glut of inventory and then prices collapsed and the homes weren't selling so the builders are pretty cautious these days. Hello Lynn last this got to ask you let vicious the overall buying patterns and trends and millennial is what wire more putting off home buying these days. When it's available any hills you know there are dealing with so many economic pressures from high unemployment. Also a lack of wage growth as well as everyone else but that the other thing has student loans so if you have a lot of student loans. You can't necessarily afford your rent let alone you know having enough money for damp payment to buy a home so we're seeing what ails. Postpone hot home purchase is largely on the heels of all these economic pressures. But keep in mind millennial represented a large portion of the population so. There's a lot of pent up demand when a comfortable letting also once those people are ready to buy out a home. We're gonna see them flood the housing market the question is when will that be likely later than sooner. Our we'll have to wait for that but in the meantime the what does he keeping your eye on this morning I know that's been Iraqi couple of days on the markets. It was in a lot of volatility over the past few days few weeks although we did have one quarter of the S&P 500 report earnings this week. And a lot of that earnings were better than expected. And the actually the S&P 500 is on track for earnings growth. Five point 5%. Compared tote last year so that's good news but of course we had this a bowl a scare. Last night so that's gonna cost more volatility. We'll certainly be watching how the rest of the trading day plays out we keep and higher earnings that's the real Brett had apparent when it comes to the markets. We'll have to wait to and other weakest going to be close out Scott get from thestreet.com Scott thanks so much appreciate it thanks Dan. Of course even keep up with latest headlines right here on abcnews.com. You go much in the big number I'm Dan Cutler in New York.

This transcript has been automatically generated and may not be 100% accurate.

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