US new home sales spike 6.2% in Oct, reverse drop in Sept

25 November 2009 16:08  [Source: ICIS news]

HOUSTON (ICIS news)--US sales of new single-family homes rose by 6.2% in October, the Commerce Department said on Wednesday, reversing a decline reported in September.

New home construction is a key downstream consuming sector for the US chemicals and plastics industries.

Each new single-family residence is said to account for some $16,000 (€10,720) in chemicals or derivative products such as plastic pipes, adhesives, insulation, roofing materials and paints and coatings among others, according to the American Chemistry Council (ACC).

The department said that sales of new single-family homes in October were at a seasonally adjusted annual rate of 430,000 units, compared with a revised September rate of 405,000 and an October 2008 rate of 409,000.

At the current sales rate, the US has a 6.7-month supply of houses, indicating that the market is approaching equilibrium, after several months of oversupply. An inventory that exceeds six months indicates an oversupplied market.

October sales preceded Congressional approval of a six-month extension and expansion of a federal tax credit for home buyers.

That tax credit, which went into force in February this year, was to expire at the end of November if Congress had failed to renew it. It provides an $8,000 tax credit to home buyers.

($1 = €0.67)

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By: Al Greenwood
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