U.S. sales of new homes fell slightly in October and the September sales pace was slower than initially thought.
The Commerce Department said Wednesday that new-home sales dipped 0.3 percent in October to a seasonally adjusted annual rate of 368,000. That's down marginally from the 369,000 pace in September, which was revised lower from an initially reported 389,000.
Sales are still 20.4 percent higher than the same month last year. Still, new-home sales are well below the annual rate of 700,000 that economists consider healthy.
Sales fell a sharp 32.3 percent in the Northeast, but the government said Hurricane Sandy had only a minimal effect on the housing data because it hit at the end of the month.
The improvement in the new-home market this year follows other reports that show the housing market starting to recover more than five years after the bubble burst.
Home prices are rising, sales are up, and builders are starting work on more new homes and apartments.
A big reason for the rebound is that the excess supply of homes that were built during the housing boom has finally thinned out. At the same time, more people are looking to buy or rent a home after living with relatives or friends during and immediately after the Great Recession. And mortgage rates have been near record lows all year, making homes more affordable.
Though new homes represent only a small portion of the housing market, they have a disproportionate impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to statistics from the National Association of Home Builders.
Sales of previously occupied homes are near five-year highs, excluding temporary spikes in 2009 and 2010 when a homebuyer tax credit boosted purchases. Builders, meanwhile, are increasingly confident that the recovery has legs. A measure of their confidence rose to the highest level in six and a half years this month. And builders broke ground on new homes and apartments last month at the fastest pace in more than four years.
The Standard & Poor's/Case-Shiller home price index, released Tuesday, found that prices rose in most major cities in September compared to August. They rose 3.6 percent in the third quarter compared to the same period last year.
There are still factors dragging on a housing recovery. Many Americans, particularly first-time homebuyers, are unable to qualify for a mortgage or can't afford larger down payments.