Sales of newly built U.S. homes fall 8.1% in October

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Sales of new homes stumbled in October.

The Commerce Department said Wednesday that sales of newly constructed dwellings stood at a seasonally adjusted annual rate of 283,000 units in October, down 8.1% from September and 28.5% below their October 2009 level.

Paul Dales, U.S. economist for Capital Economics, said the numbers were ‘close to awful.’

‘The inevitable result of weak demand and high supply will be even lower prices,’ Dales said. ‘We think that by the end of next year prices will be about 5% below current levels. That’s unlikely to derail the economic recovery, but it will certainly hold it back.’

The median new home sales price last month was $194,900. The seasonally adjusted estimate of new houses for sale at the end of October was 202,000, representing a supply of about eight months and two weeks.

Sales declined 24% month-over-month in the West. The read on the market for newly built homes follows a report Tuesday that sales of previously owned homes, which make up the bulk of the U.S. housing market, also weakened.

-- Alejandro Lazo

(AP Photo/Amy Sancetta)