US new home sales rebound in October
Posted: 25 November 2009 2355 hrs

	Photos  of

WASHINGTON: US new home sales rebounded more than expected in October to their strongest pace in more than a year, government data showed on Wednesday, suggesting stabilisation in the ailing sector.

The Commerce Department reported sales of new one-family homes rose to a seasonally-adjusted annual rate of 430,000, or by 6.2 percent from September's revised 405,000 rate.

Most analysts had forecast October sales of 404,000 new homes.

It was the first rise in two months, after declines of 2.4 percent in September and 1.0 percent in August, the data showed.

The October sales pace was the strongest since September 2008, when the collapse of Wall Street investment bank Lehman Brothers triggered a global financial firestorm.

On an annual basis, sales were 5.1 percent higher than in October 2008.

The median sales price - the midpoint between the highest and lowest price - also rebounded after two months of falls, to 212,200 dollars.

The average sales price, however, fell to 261,000 dollars.

The number of new houses for sale at the end of October was a seasonally-adjusted 239,000.

At the current pace of sales, the inventory would take 6.7 months to deplete, compared with 7.4 months at the end of September. Normal sales levels are generally estimated at four to five months' supply.

The strong sales numbers followed data earlier this week showing a surge October sales of existing homes, the bulk of the US housing market.

The National Association of Realtors said on Monday that sales of existing single-family homes and apartments rose to a seasonally-adjusted annual pace of 6.10 million units, well ahead of market expectations of 5.7 million.

"Surprisingly strong October new home sales, combined with strength in the existing home sales and continued stabilisation in house prices, present a brighter picture than has been seen in a couple of years," said Celia Chen of Moody's Economy.com.

But Patrick Newport, US economist at IHS Global Insight, cautioned that the October pace was "not statistically significant" and that monthly numbers on new home sales were volatile.

"A three- and a six-month moving average of home sales shows that new home sales are improving, but ever so slowly," Newport said.

Home sales had picked up as prospective first-time home buyers rushed to beat a November 30 deadline to take advantage of an 8,000-dollar government tax credit.

Amid concern that momentum in the ailing sector would falter as the economy emerges from recession, President Barack Obama signed into law on November 6 an extension and expansion of the tax credit through April 30.

In addition to extending the 8,000-dollar credit for first-time home buyers, the new law provides a 6,500-dollar credit to certain other home buyers.

"Since the deadline for the tax credit was extended until April, we expect consumers to feel less rushed into buying a home," analysts at Briefing.com said in a client note.

"Given that interest rates are expected to remain near the zero bound, there is less of an incentive to buy a home before April and new home sales should moderate until the middle of next year." - AFP/de