Sales of new single-family homes fell 8.1% to an annual rate of 283,000 in October after an upwardly revised gain of 12.0% in September (previously estimated as a 6.6% increase). Sales of new single-family homes have hovered around the historical low of 275,000, recorded in August, for the last six months.
Although the Housing Affordability Index is at a historically high level, sales of homes are being held back by soft employment conditions (see Chart 4). Housing market woes will continue to influence the course of monetary policy actions in the near term.
The current inventory-sales ratio of unsold homes moved up to 8.6 months from 7.9 months in October. However, the number homes for sale is close to historical lows and bodes positively for home building activity when demand for homes gathers momentum.
Asha Bangalore — Senior Vice President and Economist
Asha Bangalore is Vice President and Economist at The Northern Trust Company, Chicago. Prior to joining the bank in 1994, she was Consultant to savings and loan institutions and commercial banks at Financial & Economic Strategies Corporation, Chicago.
Copyright © 2010 Asha Bangalore
The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions.
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