New home sales up 5.7% in September to best rate since early 2010

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The Los Angeles Times

By:  Jim Puzzanghera

October 24, 2012

WASHINGTON -- New home sales jumped 5.7% in September from the previous month to the highest rate in more than two years as the housing market resurgence continued to take hold, the Commerce Department said Wednesday.

New single-family homes sold last month at an annualized rate of 389,000, up 27.1% from a year earlier. It was the best performance since April 2010, when the rate was 422,000. That figure was boosted by a tax credit for first-time homebuyers that expired at the end of 2011.

The September increase beat analysts' expectations of an annualized rate of 385,000 and came as other recent data pointed to a housing rebound.

But the median sales price for new homes last month dropped about 3.2% to $242,400, from August's revised figures. Still, September's median price was up 11.7% from a year earlier.

"All the housing data has taken a turn for the better," said Steven Ricchiuto, chief economist for Mizuho Securities.

"Clearly mortgage rates at such a low level and what appears to be an increase in banks' willingness to make loans has boosted activity off the lows," he said. "The gains look large on a year-over-year basis but that owes to the exceptionally low level of activity."

Some regions of the country fared much better than others in September sales.

New home sales were up 16.8% from the previous month in the South and 16.7% in the Northeast. But sales were down sharply -- $37.3% in the Midwest. Sales in the Western U.S. were up 3.9% from August.

Despite the overall positive data, Ricchiuto cautioned that the housing turnaround could be another "false start" unless employment picks up.

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