New home sales post best showing in more than 2 years

The inventory of new homes is still hovering near an all-time low, sitting at 145,000, a 4.5-month supply, only slightly above the rock-bottom level of 143,000.

The median sales price of new houses sold in September was $242,400 while the average sales price was $292,400. 

A separate report showed prices were up 0.7 percent on a seasonally adjusted basis in August, according to the Federal Housing Finance Agency. 

Prices are up 4.7 percent in the past year. The index is 15.9 percent below its April 2007 peak and is about the same as the June 2004 level.

Construction of new homes and building permits also are on the rise, each seeing double-digit increases in September, according to a government report last week. 

Rising prices, improved consumer and builder confidence, a four-year high in housing construction and historically low mortgage rates are bolstering the market's gradual recovery. 

The Federal Reserve has committed to purchasing about $40 billion in mortgage-backed securities each month until the employment situation shows significant improvement. 

However, the market still faces significant hurdles from continued fiscal uncertainties, lack of credit for builders and potential home buyers, inaccurate appraisals, and the above-normal number of seriously delinquent mortgages still in the system.