US new home sales expected to show slight gain in October

Markets Associated Press

The Commerce Department reports on sales of new homes in October. The report will be issued Wednesday at 10 a.m. EST.

Continue Reading Below

SLIGHT GAIN: The expectation is that there was a modest increase in sales, up 0.6 percent to a seasonally adjusted annual rate of 470,000, according to a survey of economists by data firm FactSet.

HOUSING RECOVERY: In September, U.S. sales of new homes were nearly flat, rising just 0.2 percent to an annual rate of 467,000. The government sharply revised downward what was initially reported as a surge of buying in August.

The housing market has struggled to recover fully since the recession ended more than five years ago. Many potential buyers lack the savings and strong credit history needed to afford a home, causing them to rent or remain in their existing homes instead of upgrading.

New home sales remain sharply below the annual rate of 700,000 seen during the 1990s.

In an encouraging sign, sales of existing homes rose 1.5 percent in October to a seasonally adjusted annual rate of 5.26 million, according to the National Association of Realtors. October marked the first month of 2014 in which sales of previously owned homes were higher than the same month in 2013.

Continue Reading Below

A combination of factors has depressed sales. An unusually harsh winter crippled sales at the beginning of the year and even after the snow had melted, tight credit, rising home prices and flat incomes for many Americans have limited the number of buyers who could afford a home.