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New home sales back up
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Home prices are trending higher and existing home sales roared ahead last month, but the road to recovery for new home builders took a detour in September.
New home sales unexpectedly fell 3.6% in September to an annual pace of 402,000 units, according to data released by the government. Economists surveyed by Bloomberg News had forecast a small rise to 440,000 units.
The supply of homes on the market, which is based on current sales, held at a reasonable 7.5 months, however, Bloomberg noted that at 251,000 new homes on the market, the absolute level is the lowest since 1982.
The drop in sales is a little disconcerting, but new home sales, which make up less than 10% of sales, remain in a general upward trend as 30-year fixed mortgage rates continue to hover near 5% and the first time home buyer tax credit remains in force.
The home building industry and groups tied to residential real estate are lobbying Congress to extend the tax credit amid worries that an end to the subsidy on November 30 could deal a setback to the recent gains in housing.
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