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Business Title: U.S. New Home Sales Pull Back Near Record Lows In October (RTTNews) - New home sales in the U.S. unexpectedly showed a steep drop in the month of October, according to a report released by the Commerce Department on Wednesday, with new home sales pulling back near the record low levels seen in the Summer. The Commerce Department said new home sales fell 8.1 percent to an annual rate of 283,000 in October from the revised September rate of 308,000. Economists had been expecting new home sales to rise to an annual rate of 314,000 from the 307,000 originally reported for the previous month. With the unexpected decrease, the annual rate of new home sales in October is only 2.9 percent above the record low rate of 275,000 set in August. The steep drop in new home sales reflected significantly lower sales in the West and the Midwest, where new home sales fell by 23.9 percent and 20.4 percent, respectively. New home sales in the Northeast also fell by 12.1 percent, while sales in the South edged up by 3.1 percent. The report also showed a substantial drop in the median sales price of new houses, which fell 13.9 percent to $194,900 in October from $226,300 in September. The median sales price in October is down by 9.4 percent compared to the same month a year ago. While the Commerce Department also said that the estimate of new houses for sale at the end of the month fell to 202,000 in October from 203,000, the months of supply at the current sales rate jumped to 8.6 months from 7.9 months due to the slower rate of sales. Commenting on the data, Paul Dales, U.S. economist at Capital Economics, said, "Unlike existing sales, new sales should not have been directly affected by last month's freezing of foreclosure activity. But it appears that it may have had an indirect effect on confidence." The National Association of Realtors released a separate report on Tuesday showing that existing home sales decreased roughly in line with economist estimates in the month of October following two strong monthly gains. NAR said existing home sales fell 2.2 percent to a seasonally adjusted annual rate of 4.43 million in October from 4.53 million in September. Economists had been expecting existing home sales to slip to an annual rate of 4.42 million. Lawrence Yun, NAR chief economist, said, "The housing market is experiencing an uneven recovery, and a temporary foreclosure stoppage in some states is likely to have held back a number of completed sales." "Still, sales activity is clearly off the bottom and is attempting to settle into normal sustainable levels," Yun added. "Based on current and improving job market conditions, and from attractive affordability conditions, sales should steadily improve to healthier levels of above 5 million by spring of next year."
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