Sales of new single-family homes dipped slightly in October, falling 0.3 percent to a seasonally adjusted annual rate of 368,000 from a downwardly revised pace of 369,000 in September, according to the Commerce Department. The U.S. sales pace in September was revised from a prior estimate of 389,000 units.
The Commerce Department said on Wednesday that the median sales price for a new home sold in October was $237,700, up 5.7 percent from a year earlier, but down 4.2 percent from September.
Supply also increased in October. There was a 4.8 month supply of new homes in October, compared to a 4.7 month supply in September.
Regionally, sales were mixed. In the Northeast, sales in October fell 32 percent, largely attributed to super storm Sandy, while sales in the South dropped 12 percent. Monthly sales jumped 62 percent in the Midwest and 9 percent in the West.
Sales were still 17 percent higher in October than the same month in 2011. Even with the gain, new home sales are well below the annual rate of 700,000 that economists consider healthy.
The modest improvement in the new home market follows other housing reports that show the real estate market starting to recover more than five years after the bubble burst. The housing market has been showing gradual signs of improvement, with builder confidence hitting a six-year high last month, sales of previously owned homes on the rise and mortgage rates hovering at historic lows.
Foreclosure activity continues to put downward pressure on new home sales, however. Each month, over 180,000 bank-owned foreclosures hit the housing market, casting a shadow over new and existing home sales.
In addition to foreclosures, a big concern for home builders is the uncertainty of the looming fiscal cliff — and its effects on housing. Housing experts worry that the mortgage interest deduction could fall off the cliff, ending a popular tax break for home buyers.
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