The Commerce Department said Wednesday that sales fell 3.6% to a seasonally adjusted annual rate of 402,000 from a downwardly revised 417,000 in August. Economists surveyed by Thomson Reuters 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.

The median sales price of $204,800 was off 9.1% from $225,200 a year earlier, but up 2.5% from August's level of $199,900.

A measure to extend the soon-to-expire $8,000 tax credit for first time homebuyers enjoys widespread support in the Senate, the chamber's top Democrat and top Republican both said Wednesday.

The Senate is expected to vote on its renewal as part of a bill that would extend unemployment benefits.

But the timing of a vote remained uncertain due to a continuing dispute over other unrelated measures which Republicans would like to include in the bill, such as a ban on funding for the liberal activist group ACORN.

Another report Wednesday said orders to factories for big-ticket manufactured goods rose in September as the biggest jump in demand for machinery in 18 months offset weakness in commercial aircraft and autos.

The Commerce Department said that orders for durable goods increased 1% last month, matching economists' expectations. Excluding transportation, orders rose 0.9%, slightly better than the 0.7% that economists had forecast.

Non-defense capital goods excluding aircraft, a closely watched proxy for business spending, beat expectations and rose 2% in September after falling 0.8% the month before. Analysts had anticipated they would increase 0.9%.

Durable goods orders are a leading indicator of manufacturing, which in turn provides a good measure of overall business health.

The second advance in three months for items expected to last at least three years is a hopeful sign for the manufacturing sector, which has helped lead the early stages of the fledgling economic recovery. But many economists worry that demand could falter in the months ahead as various government stimulus programs wind down.

Contributing: Reuters