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US New Home Sales Fall 0.3% in October

Sales of new homes in the US fell in October and the prior month’s figures were worse than 1st estimated, a sign that the housing recovery remains uneven.

New single-family home sales decreased by 0.3% last month from September to a seasonally adjusted annual rate of 368,000, the Commerce Department said Wednesday.

The October results were below expectations. Economists surveyed by Dow Jones Newswires had forecast an annual sales rate of 385,000. In addition, September sales were revised down to a rate of 369,000 from an initial reading of 389,000.

The number of new homes listed for sale, adjusted for seasonal factors, at the end of October was 147,000, a supply that would take 4.8 months to deplete at the current sales pace. The median price for a new home in October was $ 237,700, up 5.7% from a year ago.

Despite the monthly decline, new home sales were up more than 17% from October 2011.

Low home prices, record-low mortgage rates, and a an improving economy have sparked renewed interest in home buying. Residential construction has added to economic growth for six consecutive quarters.

Economists project US GDP growth will slow in Q-4 of the year from the sluggish 2% annual rate in Q-3. However, the improving housing market is giving the economy its biggest lift since the real-estate boom.

The housing market is well below its peak as sales and construction levels both lag behind pre-bubble levels and tightened credit restrictions make it difficult to secure a mortgage. Many prospective homeowners have too little home- equity to sell their current residence and buy another home.

New-home sales peaked in July 2005, when they hit an annual pace of nearly 1.4-M, and declined sharply in the run up to the financial crisis. Last year’s level of 306,000 sales was the lowest on record.

October’s new-home sales were mixed across 4 US. regions compared with a month earlier.

Sales were up 62.2% in the Midwest and up 8.8% in the West, but fell 32.3% in the Northeast and 11.6% in the South.

The US Commerce Department said the effect of Superstorm Sandy, which made landfall late in the month, was minimal.