Although economists predicted that sales of new homes in the US would come in at an annual pace of 390,000 (following September’s revised rate of 369,000) the figure for October actually came in at 368,000.
After releasing the report the Commerce Department asserted that the data had only been minimally affected by Superstorm Sandy.
This 0.3 per cent decline in sales contributes to an uneven picture of the US housing market and underpins concerns raised by Federal Reserve Chairman Ben Bernanke about the housing industry.
On November 15th Bernanke commented that ‘overly tight lending standards may now be preventing creditworthy borrowers from buying homes, thereby slowing the revival in housing and impeding the economic recovery’.
Although purchases have increased by 4.5 per cent over the last six months limited access to credit has kept the market restrained in areas.
Two of the four regions experienced a decrease in purchases in October, with home purchases in the Northeast dropping by 32.3 per cent.
However, purchases in the West enjoyed an 8.8 per cent upswing whilst sales in the Midwest jumped to 62.2 per cent and their highest level for nearly 36 months.
Chief US economist with RBC Capital Markets commented before the report: ‘While housing has bottomed and it’s clearly moving in the right direction, we just don’t know how much momentum it’s going to be able to gather in an environment where the labour backdrop, whether defined by job growth or wages, is itself not gathering much momentum.’
In a separate report compiled by the National Association of Realtors, in October previously owned homes sold close to the two-year high pace seen in August, selling at a rate of 4.79 million.
Prices have also started to stabilize in the ‘distressed property’ market with home foreclosures plummeting by nearly 20 per cent compared with the same period of 2011.
As of 15:48 pm
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