New-home sales edge higher

NEW YORK (CNNMoney) -- New-home sales edged slightly higher last month, as more Americans hunted for bargains in the struggling housing market.

The 307,000 rate fell just short of expectations. Economists had forecast a sales rate of 312,000 new homes, according to consensus estimates from Briefing.com.

The Census Bureau reported an annual sales rate of 307,000 new homes last month, up 1.3% from a downwardly revised rate of 303,000 homes in September. Compared to new home sales a year ago, October sales were up 8.9%.

While the higher rate in October indicated that consumers are chipping away at the hugeinventory of homes on the market, there's still a long way to go.

There were about 162,000 new homes on the market by the end of October. That represented a 6.3-month supply at the current rate of sale. The median sale price was $212,300.

Housing in 2012: Things are looking up

Last week, a separate report showed that more house-hunters are also eyeing previously owned homes. Sales of existing homes rose 1.4% in October, slightly more than economists had expected, according to the report.

At the same time, an increasing number of homebuilders are making plans to build houses and breaking ground on new construction, with building permits and housing starts climbing in October, according to a report released earlier this month.  

Home Sales Up in October

Existing home sales edge higher in October

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By Blake Ellis @CNNMoney November 21, 2011: 10:56 AM ET

NEW YORK (CNNMoney) -- Homebuyers scooped up more previously owned homes in October, slowly putting a dent in the huge inventory on the market, an industry report showed Monday.

Sales of existing homes rose 1.4% last month to an annual rate of 4.97 million homes, up from a downwardly revised 4.90 million homes in September, the National Association of Realtors reported Monday.

That was higher than expected. Economists polled by Briefing.com had expected an annual rate of 4.85 million homes in October.

Compared to a year ago, the rate of existing home sales has jumped 13.5%, from 4.38 million units.

Continued gains in home sales have lightened up the inventory of homes on the market, the report showed. Total housing inventory at the end of October slipped 2.2% to 3.33 million existing homes for sale, representing an 8-month supply at the current sales pace. That's down from an 8.3-month supply in September, and continues an ongoing downward trend since hitting a record high of 4.58 million in July 2008.

Housing in 2012: Things are looking up

Foreclosures and short sales dropped to 28% of sales in October, down from 30% in September.

Even as the stockpile of homes on the market eases, housing prices are continuing to dip. The median price for an existing home was $162,500 in October, 4.7% lower than a year ago.

That means it's still a great buying opportunity for house hunters. But one of the problems preventing the housing market from making a full recovery is that many of the homebuyers attempting to buy houses are seeing their mortgage applications rejected, said NAR chief economist Lawrence Yun.

Contract failures, which include declined mortgage applications or failures in loan underwriting because of problems including appraised values coming in below the negotiated price, jumped to 33% in October, up from 18% in September.

"Home sales have been stuck in a narrow range despite several improving factors that generally lead to higher home sales, such as job creation, rising rents and high affordability conditions," said Yun.  

First Published: November 21, 2011: 10:26 AM ET