US new home sales rise to 10-year high

US sales of new single-family homes quickened for the second straight month in October, rising to the highest level since the housing bubble, according to data released Monday.

The increase points to a recovery in sales after what had been a sluggish year amid tightening supply and rising prices.

But the monthly gain was boosted by the storm-damaged southern US, which continued to see robust sales.

Sales of new homes rose 6.2 percent compared to September to an annual rate of 685,000 units, seasonally adjusted, the fastest pace since October 2007, the Commerce Department said in its monthly report.

The result overshot the expectations of analysts, who had been expecting a 2.5 percent decline.

The estimates are subject to a high degree of uncertainty, however. Sales in September, which originally were reported as a 10-year record, were revised down.

Patrick Newport of IHS Markit said it is more useful to focus on trends over several months.

"It takes about six months to establish a trend -- the six-month moving average shows sales moving up gradually nationally," he said in a client note. "The prognosis going forward is for further steady growth over the next two years."

Analysts have said the tight housing market is weighing on sales and pricing houses beyond the reach of many would-be homeowners.

And yet sales in the South, which suffered back-to-back hurricanes at the end of the summer, rose to 383,000 units -- the highest level since October 2007 -- even though it was an increase of just 1.3 percent from the prior month.

Sales soared in the Northeast, jumping 30.2 percent, also a 10-year record, while sales in the Midwest surged 17.9 percent.

Jim O'Sullivan of High Frequency Economics said despite frequent revisions and ups and downs, the figures show an improvement over recent years.

"Through the volatility, sales have averaged a 613,000 annual rate so far this year, up from 561,000, on average, in 2016, 503,000 in 2015 and 440,000 in 2014," he said in a research note.

"The data are highly volatile but sales appear to have regained some momentum after some slowing earlier."

The brisk sales pace drew down the supply of available new homes to 4.9 months, a 5.8 percent decline, but in raw numbers the pool of houses for sale changed little at 282,000, the highest since May 2009.

Despite the strong demand, the median sales price fell 3.7 percent to $312,800. However, the average price hit its highest level on record, rising five percent to $400,200.