In addition, the government has taken steps to ease lending standards for young adults. However, an anticipated interest rate hike next month by the Federal Reserve could make housing a bit expensive, especially if there is no significant pick-up in wage growth.
"There is every reason to expect that the demand for homes will grind higher in the coming months. While interest rates are set to rise, so are incomes, and that will keep housing affordability historically favorable," said Matthew Pointon, property economist at Capital Economics in New York.
The weak sales come on the heels of reports last week showing a drop in housing starts in October and a decline in confidence among homebuilders. Economists had forecast sales falling to a rate of 5.4 million units last month.
The dollar rose to an eight-month high against a basket of currencies, while prices for U.S. government debt were up marginally. The housing index rose 0.3 percent as the shortage of houses for sale was seen boosting homebuilders such as D.R. Horton (DRI) and Lennar (LEN).
A separate report showed Markit's Purchasing Managers Index hit a 25-month low in early November, highlighting continued weakness in the factory sector. The decline, however, brought the PMI in line with the Institute for Supply Management survey, which has a longer history of tracking the manufacturing sector.
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