New Home Sales Fall in Oct.

WASHINGTON (AP) â€” Sales of new homes moderated in October after surging the month before, further evidence that economic growth is slowing to a more sustainable pace. <br><br>Americans purchased new

Monday, December 4th 2000, 12:00 am

By: News On 6

WASHINGTON (AP) â€” Sales of new homes moderated in October after surging the month before, further evidence that economic growth is slowing to a more sustainable pace.

Americans purchased new single-family homes at a seasonally adjusted annual rate of 928,000 in October, a 2.6 percent drop from September, the Commerce Department said Monday. Some analysts were expecting new-home sales to fall 4.9 percent.

Even with the decline, new-home prices reached record levels in October, a sign of the healthy housing market.

In a second report, the Conference Board said its index of leading indicators declined 0.2 percent in October, more evidence of the cooling economy.

New-home sales soared by 11.9 percent in September, the biggest jump since September 1993, according to revised figures that were stronger than the government previously estimated. That pushed September's sales level to 953,000, the highest since November 1998.

The Federal Reserve has boosted short-term interest rates six times since June 1999 to slow the economy's growth enough to keep inflation in check, but not so much that it triggers a recession. The Fed's rate increases are designed to raise borrowing costs and dampen demand for big-ticket items such as homes and cars. Many call this an attempt to reach a ``soft landing'' for the high-flying economy.

The Fed's rate increases are working to slow economic growth, which clocked in at a 2.4 percent rate in the third quarter, and that has reduced pressure on long-term interest rates.

The average rate on a fixed-rate 30-year mortgage was 7.8 percent in October, down slightly from the average 7.9 percent rates posted in September and in October 1999.

With mortgage rates holding steady below the 8 percent mark, home builders say they feel good about future sales. Last week, the government reported that construction spending nationwide jumped 0.9 percent in October, its second highest level on record.

With home sales at solid levels, home prices rose to all-time monthly highs in October.

The median sales price, the midpoint where half the homes sold for more and half for less, increased 2.9 percent to a record $174,900 in October.

The average price of a new home sold in October rose to a record $218,400, up 6.9 percent from September's average of $204,300.

Sales fell in every region except the Northeast where they rose.

Sales declined by 8.9 percent in the West to a seasonally adjusted annual rate of 256,000. They fell by 8.2 percent in the Midwest to a rate of 156,000 and they dropped by 2.8 percent in the South to 421,000. But in the Northeast they rose a whopping 37.7 percent to a rate of 95,000.

Housing activity, an engine of the robust economy, is expected to moderate this year but still be at robust levels.