WASHINGTON -- Sales of new homes recovered in October after suffering a steep drop in September, returning to this year's trend of an improving market for real estate developers and builders.
The Commerce Department said Wednesday that new-home sales climbed 10.7 percent last month to a seasonally adjusted annual rate of 495,000. This rebound followed a 12.9 percent plunge in the sales rate during September.
Americans recovered much of their appetite for owning new homes this year. Purchases have surged 15.7 percent year-to-date, benefiting from the solid hiring gains and low mortgage rates.
"We still see new-home sales consistent with a moderate and sustained recovery in the housing market," said Blerina Uruci, an analyst at Barclays.
The new-home sales report tends to be volatile from month to month. Downward revisions lowered home sales reported in September, August and July by a combined 40,000.
The October figures reflected some geographical extremes. Home-buying surged 135.5 percent in the Northeast, while rising less aggressively in the Midwest and South. Sales dropped slightly in the West.
But prices dipped last month despite other industry reports indicating that real estate prices have eclipsed income growth. In October, the median new-home sales price fell 8.5 percent from a year ago to $281,500.
The real estate sector is still healing from the bursting of the housing bubble and the 2008 financial crisis. Sales of new homes remain below the 52-year historic average of 655,200.
There are other signs that the sales gains of the past year are leveling off after improvements in prior months. Sales of previously owned homes began to slow last month, a sign that rising prices are creating affordability problems for many would-be buyers.
The National Association of Realtors said Monday that sales of previously owned homes fell 3.4 percent in October to a seasonally adjusted annual rate of 5.36 million.
Despite that monthly decline, purchases of previously owned homes have increased 3.9 percent from a year ago. The sales improved even though potential buyers face slim pickings as the number of listings on the market has dropped 4.5 percent.
The average, 30-year fixed mortgage rate was slightly under 4 percent this week, compared with 3.79 percent a month ago, according to mortgage buyer Freddie Mac.
U.S. home prices rose 5.7 percent in the third quarter from a year earlier as buyers competed for the tighter supply of available properties.
Prices climbed 1.3 percent on a seasonally adjusted basis from the previous three months, the Federal Housing Finance Agency said in a report Wednesday from Washington.
"The factors that have contributed to extraordinary price growth over the last few years -- low interest rates, tight inventories, strong buyer confidence and improving income growth -- continued to drive prices upward in much of the country," Andrew Leventis, the FHFA's principal economist, said in a statement. "However, as prices continue to rise, reduced affordability will be a stronger market headwind."
Prices in September rose 0.8 percent on a seasonally adjusted basis from August, according to the FHFA. The average estimate of 19 economists surveyed by Bloomberg was for a 0.4 percent gain.
Among the 100 most-populated metropolitan areas, prices jumped 16.1 percent from a year earlier in North Port-Sarasota-Bradenton, Fla. The biggest decline was in El Paso, Texas, where prices fell 3.6 percent.
Information for this article was contributed by Prashant Gopal of Bloomberg News.
Business on 11/26/2015