U.S. New-Home Sales Rise to Highest in 2.5 Years

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New home salesWASHINGTON (AP) - U.S. sales of new homes jumped last month to the highest level in more than two years, further evidence of a sustained housing recovery that could help lift the lackluster economy.

The Commerce Department said Wednesday that new home sales rose 5.7 percent in September to a seasonally adjusted annual rate of 389,000. That's up from a rate of 368,000 in August and the highest rate since April 2010, when a federal homebuyer tax credit inflated sales.

Sales have risen 27.1 percent in the past year. That's the strongest yearly gain since February, although sales are still well below healthy levels.

The figures suggest the housing recovery is strengthening. The increase follows other reports that show home prices are rising more consistently, builders are starting to build more homes and sales of previously occupied homes are up in the past year.

Faster construction could help boost economic growth and hiring. And it could also encourage more people to put their homes on the market.

For now, rising sales are keeping inventories low. There were 145,000 new homes for sale at the end of September, near the record low of 143,000. That level of inventory would be exhausted in 4.5 months at the current sales pace, the lowest level since October 2005. That could push up home prices in the coming months, economists said.

Builders are taking steps to change that. In September, they broke ground on single-family homes and apartments at the fastest pace in more than four years. And they requested the most building permits in four years, a sign that many are confident that the gains in home sales will endure.

Builders are more optimistic because they are seeing more prospective buyers visit properties. The National Association of Home Builders/Wells Fargo builder sentiment index rose this month to the highest level in more than six years.

Higher new home sales seem "to have largely justified the 11 percent jump in September housing starts," Pierre Ellis, an economist at Decision Economics, said.

The median price of a new home fell 3.2 percent in September to $242,400. The median price is exactly halfway between the most expensive and the cheapest homes. But the median price has risen 11.7 percent in the past year.

On a regional basis, sales rose in the Northeast, South and West, but fell sharply in the Midwest.

Home sales have also been bolstered by the lowest mortgages rates in decades. The average rate on the 30-year fixed mortgage has been below 4 percent all year. And the Federal Reserve's aggressive policies could push mortgage rate down even further.

There are still factors dragging on a housing recovery. Many Americans, particularly first-time homebuyers, are unable to qualify for a mortgage or can't afford larger down payments.

Though new homes represent only a small portion of the housing market, they have a disproportionate impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to statistics from the National Association of Home Builders.

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donut999

Echo tj1108. Stats really need to be looked at with a keen eye. First of all, this stat has nowhere to go but up. When these year ago comparision stats come out, they should add "up from the dismal numbers". Same with the pre-owned. A stat the other day about shrinking housing inventory the other day should have also had the caveat "of desirable houses". A lot of people who were/are not in trouble finally bit the bullet on the "paper loss" for their existing home and entered the market. If you have shopped for a new home, you will find out builders are offering tons of incentives, including mid to big ones offering 5 year mortgage rates under 3%.

October 25 2012 at 2:14 PM Report abuse rate up rate down Reply
donut999

t

October 25 2012 at 2:05 PM Report abuse rate up rate down Reply
tj1108

Highest in 2-1/2 yrs. Thats not saying anything. The housing industry went bust 4-1/2 yrs ago. And its been 2 steps upward and 3 steps backward ever since. The liberal media touts the 2 steps forward and ignors the 3 steps backward, but most Americans are aware of their homes value and sick of seing it decline.

October 25 2012 at 12:05 PM Report abuse rate up rate down Reply
coochiescooter

Horse Feathers Wilbur !

October 24 2012 at 6:25 PM Report abuse -1 rate up rate down Reply
papadb24

More Huffy Cheer leading at the Last Minute. Were no longer buying it!

October 24 2012 at 3:36 PM Report abuse +1 rate up rate down Reply
Cate

$150K that is

October 24 2012 at 2:19 PM Report abuse rate up rate down Reply
Cate

Tell that to all of the people here is Las Vegas where most people are $150 and up underwater.

October 24 2012 at 2:19 PM Report abuse rate up rate down Reply
rjmjlm711

Yea Right . What A bunch of B.S

October 24 2012 at 1:57 PM Report abuse +1 rate up rate down Reply