U.S. new home sales slipped 1.4% in September, a sign of weakness to come, economists say.

New home sales in the U.S. fell by 1.4% to 864,000 units, and August’s sales were revised down too. Sales are now down 4.2% from a year ago. BMO Nesbitt Burns says the overall economic slowdown is starting to bite housing too.

“The housing sector, which had been one pillar of strength holding up the U.S. economy, has begun to feel the effects of the widening downturn. However, the 12-month average of 914,000 is still high by historical standards.”

The weakness was in September sales spread across most regions, with the Northeast particularly hard hit “as the terrorist attacks disrupted business and hurt confidence particularly hard in that region”. Looking ahead, BMO says it sees weakening activity over the next few months.

“The terrorist attacks certainly disrupted activity in the housing market in September. However, signs were already pointing towards weakening in this sector prior to September. Employment concerns and weak consumer confidence going forward will continue to weigh on the housing sector over the coming months, offsetting declining borrowing costs,” it notes.