New home sales dip slightly in October

New home sales dipped slightly in October as the housing market gets back on its feet after years of struggling. 

Sales fell 0.3 percent last month to a seasonally adjusted annual rate of 368,000, below the downwardly revised pace in September, which fell to 369,000 from the initial estimate of 389,000, the Commerce Department reported on Wednesday. 

The Northeast's sharp drop of 32.3 percent put a drag on the numbers that have been showing steady improvement. Sales are up 20.4 percent from the same month last year, but still running behind the 700,000 that reflects a healthy market. 

"After steady improvement in home sales through most of this year, the pace of that activity effectively leveled off over the four months from July to October," said David Crowe, chief economist for the National Association of Home Builders. "The latest numbers are right in line with our forecast, which projects that sales will resume a slow, upward trajectory going forward and will end 2012 about 20 percent ahead of 2011."

Sales jumped by 62.2 percent in the Midwest and were up 8.8 percent in the West. Sales fell by 11.6 percent in the South. 

The housing market has been showing gradual signs of improvement, with builder confidence hitting a six-year high last month, sales of previously owned homes on the rise and mortgage rates hovering near historic lows. 

The Standard & Poor's/Case-Shiller home price index released Tuesday reported that prices are on the rise in most cities, including Atlanta, which broke a 26-month streak of falling prices last month. 

Prices rose 1.1 percent in the July-September quarter and were up 0.2 percent in September, the Federal Housing Finance Agency reported on Tuesday. 

"The past year has seen consistent price increases, but a number of factors continue to affect the recovery in home prices such as stagnant income growth, high unemployment levels, lingering uncertainty about the macroeconomy and the large number of homes in the foreclosure pipeline," said Andrew Leventis, FHFA's principal economist. 

A separate report showed that mortgage applications decreased 0.9 percent from one week earlier, according to data from the Mortgage Bankers Association on Wednesday. This week’s results include an adjustment for the Thanksgiving holiday.

Refinancing was down 2 percent while purchases were up 3 percent. 

The median sales price of new houses sold was $237,700. 

The seasonally adjusted estimate of new houses for sale at the end of October was 147,000, a 4.8-month supply at the current sales rate, up slightly from September. 

This post was updated at 12:15 p.m. and at 2:20 p.m. 

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