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WASHINGTON (AP) — Sales of new homes improved last month after the worst summer in nearly five decades, but not enough to lift the struggling economy.
The Commerce Department says new home sales in September grew 6.6 percent from a month earlier to a seasonally adjusted annual sales pace of 307,000. Even with the increase, the past five months have been the worst for new home sales on records dating back to 1963.
The sales figures were driven by a 61 percent monthly surge in the Midwest. Sales grew about 3 percent in the South and Northeast. They fell by nearly 10 percent in the West.
New home sales have risen 9 percent from the bottom in May but are still down 78 percent from their peak sales pace of nearly 1.4 million homes in July 2005. A healthy sales pace is around 800,000 new homes.
High unemployment, tight credit and uncertainty about home prices have kept people from buying homes. Government tax credits propelled the market earlier in the year, but those expired in April.
The median sales price was $223,800. That was up 3.3 percent from a year earlier.
Builders are competing with millions of foreclosures and other distressed properties that show no signs of abating. They are unlikely to ramp up construction until those are cleared away and demand picks up.
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