Sales rise as supplies of US homes drop to new lows
Much of the sales activity for new home sales was driven by low prices and low mortgage interest rates
Washington: Sales of newly built homes rose to the highest level in more than a year while the supply of these homes dropped to new lows, according to government data released last week.
Purchases of single-family homes rose 6.2 per cent in October from September to a seasonally adjusted annual rate of 430,000, the Commerce Department reported.
The jump was driven solely by the South, the largest new home sales market in the nation. That region posted a 23 per cent gain while sales in other regions slipped.
"A six per cent gain is nothing to sneeze at," said Michael Larson, a housing analyst at Weiss Research. "It's definitely better than expected."
The data provides more evidence of the continued, but fragile, recovery in the housing market.
The upbeat sales figures add to the pattern of improvement seen in other economic indicators, including a surprising 10.1 per cent surge in October of existing home sales, reported earlier this week.
Tax credit
Much of the sales activity for new home sales was driven by low prices and low mortgage interest rates. The $8,000 (Dh29,384) tax credit for first-time buyers would have had little impact on last month's gains, analysts said.
Those figures capture contract signings in October. But most buyers would be eligible for the tax credit months later, when the home is built and the borrower closes on it.
"It's highly unlikely that the buyers in October were motivated by the tax credit," said Patrick Newport, an economist at IHS Global Insight.
