New Home Sales Rise Again

By:
Peter King | November 27, 2009

New home sales rose 6.2 percent in October, for the sixth increase in the past seven months, according to new figures released by the Commerce Department.

Sales of newly built, single-family homes were at a seasonally adjusted level of 430,000 in October, up from 405,000 the month before. Private economists had predicted an increase of only half a percent.
 
“The rise in new home sales is encouraging. Sales have risen substantially above their low in January, and the inventory of unsold homes has fallen sharply,” said Commerce Under Secretary Rebecca Blank. “. Low mortgage rates and the extension and expansion of the (homebuyer) tax incentive should support continuing sales growth in the coming months.”
 
The October sales rate represented a 5.1 percent gain over the October 2008 sales rate of 409,000 and was 30.7 percent above the January 2009 figures, when the market bottomed out at an annual rate of 329,000 units. October’s median sales price was $212,200; with an average sales price of $261,100.
 
In another encouraging sign, the estimate of new homes for sale fell to 239,000 in October, representing a 6.7 months’ supply at current sales rates. That’s nearly half of the 12.4 month’s supply that was estimated in January 2009, when 340,000 new homes were on the market.
 
A six-month inventory of unsold homes is generally considered the point where home prices stabilize. More to the point, as the inventory of unsold homes shrinks, builders are once again have an incentive to resume construction, adding to supply and creating more jobs in a crucial sector of the economy.

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