Low Inventory Leads to Solid Gains in New Home Sales

New home sales posted a solid gain last month, fueled by strong demand, low existing inventory and buyers' anticipation of future higher mortgage rates. Sales of newly built, single-family homes in September rose 14% to an 800,000 seasonally adjusted annual rate from a downwardly revised reading in August, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

"Limited existing inventory and low interest rates are keeping demand strong, and more potential buyers may be coming off the fence as they expect interest rates to rise in the future," said Chuck Fowke, chairman of the National Association of Home Builders (NAHB) and custom home builder from Florida.