New Home Sales: Lowest Since 1991

Another ugly report for housing.

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The government on Wednesday released its new home sales report for October. Here are the key stats:

New home sales fell 5 percent from September and 40 percent from October 2007.

The median price of new homes fell 7 percent, to $218,000, from a year earlier.

Here’s what Mike Larson, a real estate analyst at Weiss Research, had to say about the numbers in a report of his own:

As expected, October was a disappointing month for the home building industry. Sales slumped to the lowest level in 17 years, while prices retreated to levels we haven't seen in four years. The one encouraging trend in the new home market -- which we haven't seen repeated in the existing home market yet -- is the decline in housing inventory. The dramatic drop in construction activity has led to a sharp decline in the supply of new homes on the market.

The demand side of the equation remains challenging, with unemployment on the rise and the economy on the decline. But it's possible the market will see a pop as a result of the recent sharp decline in mortgage rates. The Fed's announcement that it would start buying mortgage backed securities has helped drive conventional, 30-year fixed rates into the mid 5s from just over 6%.