US new homes sales see surprise increase

Sales of new US homes have posted a surprise higher than expected rise in September, new data shows, but asking prices continued to fall as the market remains weak.

Sales were up 5.7 per cent in September, to a seasonally adjusted 313,000-unit annual rate, as sales in the South logged their fastest pace since April 2010, offsetting a steep decline in the Midwest.

The average expectation was for a rate of 300,000.

But economists warned that the single monthly figure was likely to be volatile as mortgage applications were still so low.

“A 5.7 per cent increase in sales might sound impressive, but these numbers are very volatile and the margin of error is plus or minus 18.4 per cent. In other words, the September gain was statistically insignificant; we can't be sure it happened at all,” said Ian Shepherdson, chief US economist at High Frequency Economics.

“A real recovery remains elusive; mortgage apps still very low,” he added.