US new home sales rose modestly in October, with inventories on the market continuing to creep higher as the housing market recovery lags, government data released Wednesday showed.
Sales of new single-family homes rose 0.7 percent from September to an annual rate of 458,000, the highest pace of the year, the Commerce Department reported.
But that modest growth came from a lowered base after the department revised down the September pace to 455,000 from 467,000. The readings for July and August were also lowered, taking the three months' gains down by a combined 30,000.
The October reading came in below analysts' consensus forecast that new home sales would increase to 470,000.
"The level of purchases has been in a tight pattern for the past three months and it is still below 500,000 a month, annualized. Strong sales would be around one million, so the sector has a long way to go," said Joel Naroff, chief economist at Naroff Economic Advisers.
Compared with a year ago, new home sales were up 1.8 percent.
The inventory of new homes for sale in October climbed for the seventh consecutive month, reaching 212,000 at the end of the month. That marked a 5.6-month supply at the current sales pace.
Sale prices of new houses sold in October resumed their upward trend after a pullback in September, hitting their highest levels of the year to date.
The median sales price was $305,000, while the average price was $401,100. A year ago the prices were $264,300 and $335,700, respectively.
"New homes sales, like existing-home sales, are stalled far below their pre-recession levels and do not look poised to move up any time soon, especially as home prices rise while wage growth is stagnant," said Sophia Kearney-Lederman, an economic analyst at FTN Financial.