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Sales of newly built homes dropped for the fourth consecutive month, while new construction inventory reached the highest level in years, the U.S. Commerce Department reported Wednesday. Sales of new single-family homes dropped 5.5 percent last month, the slowest pace since December 2016. “New-home sales activity has slowed this summer as housing affordability remains a serious issue,” says Randy Noel, chairman of the National Association of Home Builders. “However, sales are up from this time last year, and builders continue to report consumer interest in housing.” Sales are up 3.5 percent on a year-to-date basis compared to 2017. 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, says NAHB Chief Economist Robert Dietz. “Builders need to provide homes at different price points to address these affordability concerns.” The median sales price of a new home in September was $320,000. That is down from a year ago, when the median home price was $331,500. A survey of small and mid-size builders across the country from BTIG/HomeSphere found that conditions for builders “deteriorated markedly” in September, and sales were worse than many had expected. “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,” Ian Shepherdson, chief economist for Pantheon Macro, told MarketWatch. “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.” New-home sales are still on the rise in the Midwest. The region saw sales of new homes increase 6.9 percent in September compared to August. But sales plunged 40.6 percent in the Northeast, 12 percent in the West, and 1.5 percent in the South.