New home sales increased 6.6 percent in September compared to the previous month to an annual rate of 307,000, but fell 21.5 percent below sales figures from September 2009. Officials took the report as a sign of cautious optimism.
"While we're seeing improvement, the overall housing sector still faces substantial challenges, including the large supply of existing homes on the market, and activity remains at a low level," said U.S. Commerce Department under secretary for economic affairs Rebecca Blank. "However, falling prices and historically low mortgage rates have created a favorable environment for many households that are ready to buy a new home."
The higher sales pace also reduced the available inventory of new homes, which fell from 8.6 months to 8.0 months.
The National Association of Home Builders also took the report as a positive sign for the housing market, saying that sales were "finally moving in the right direction," but added that credit problems continue to be an issue for builders, who can't get financing to replenish supply - which it said could hinder future improvements.
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