October New-home Sales Up, Inventory Down

The Commerce Department reported Wednesday that new home sales rose 6.2% from September to October, reaching a seasonally adjusted rate of 430,000 sales per year. The numbers took several Wall Street analysts by surprise – a panel of expert forecasts had expected an annual rate of 404,000 new-home sales.

A decrease new-home inventory – down to a 6.7 month supply of 239,000 homes – was also positive news, indicating that housing supply and demand levels are continuing to stabilize.

Though the recent reduction of home construction has helped to bring the housing market closer to equilibrium, it has also negatively affected the economy at large. Residential construction contributes significantly to America’s gross domestic product, thus the industry’s return to health is imperative for the nation’s economic recovery.

Though the latest reports show improvements, new-home sales are still 70% lower than their peak in July 2005. The market has taken another step in the right direction, and it still has several steps to go.  

For a more detailed report, visit cnnmoney.com.

Tags: Economy, Housing market