Housing's Pain Not Easing

Updated from 10:40 a.m. EST

The latest new-home sales data show that the U.S. housing market remains in a funk and has probably not yet bottomed.

Sales of new homes climbed 1.7% sequentially in October, but that rise came from sharply downwardly revised levels the previous month. The report also showed that inventories remain at high levels; this will put pressure on home prices, as builders resort to discounts to clear homes.

New-home sales were at a seasonally adjusted annual rate of 728,000 in October, the Census Bureau said Thursday. While that's up from a rate of 716,000 homes the prior month, it marks a 23.5% plunge from the rate a year ago.

Moreover, the September figures were lowered significantly, affecting comparisons in October. Previously, the government estimated a sales rate of 777,000 units in September.

The October figures were below economists' expectation for a rate of 750,000 homes, according to Reuters.

"We would not be willing to call September the bottom in sales despite the increase; sales still have room to fall this year," Wachovia economic analyst Adam York said in a research report.

With housing shows no signs of improving, the question becomes whether the economy has already felt the brunt of the slowdown or whether more danger looms. Joseph Lavorgna, chief U.S. economist with Deutsche Bank Securities, continues to be in the camp that expects the country to avoid a recession.