New-home sales up but prices down

Sales of new homes rose in September after four straight monthly declines, largely because builders cut their prices in the face of depressed demand. Analysts say the modest increase on the back of reduced prices suggests the struggling housing market is years away from a turnaround.

The Commerce Department said yesterday that sales increased 5.7 percent last month to a seasonally adjusted annual rate of 313,000 homes. Still, sales rose after hitting a six-month low in August. And the annual pace remains less than half the 700,000 that economists say is healthy.

A big reason for the gain was that the median sales price fell 3.1 percent to $204,400 -- the lowest since October 2010.

March through August is typically the peak buying season. But this year Americans bought fewer new homes in that stretch than in any six-month period on record going back to 1963.

New homes are about one-fifth of the housing market but have a big impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in taxes, said the National Association of Home Builders.-- AP