DEC 4, 2013 11:46am ET

New Home Sales Return to Summer Highs

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New home sales jumped 25% in October after a 7% drop in September, according to a new government report.

The surge in sales shows demand for new homes remained strong during the fall and lenders continued to process loans despite the government shutdown.

This surprised many economists who predicted a slight decline in October sales. Overall, October new home sales are nearly 22% above the level a year ago.

Sales of newly constructed homes jumped to a 444,000 seasonally adjusted annual rate in October from a 354,000 rate in September, the Census Bureau reported Wednesday morning.

The October sales rate is the highest since this summer when sales hit a 450,000 rate in June.

Sales jumped 19% in Northeast, 34% in the Midwest, 28% in the South and 15% in the West.

Builders had 183,000 new completed homes for sale going into November, which provides a five-month supply at the current rate.

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