Despite the development of a new Ebola case in New York City, the market is surprisingly calm. All three major indices are in the green at the moment, with the Dow once again getting a boost from positive earnings. Earnings helped boost Microsoft (MSFT) and Proctor & Gamble (PG) this morning, plus Pfizer (PFE) is getting a lift after announcing a $0.26 fourth-quarter 2014 dividend and that its Board authorized a new $11 billion share repurchase program. Markets continue to be weak overseas; China in particular is having quite the housing concern as of late. Chinese home prices fell for a fifth straight month in September, wiping out gains from the past year and raising expectations the government will have to implement more economic stimulus measures to cushion the blow. Average home prices in 70 major cities are down 1.3% from a year earlier and this is the first big drop since November 2012. The decelerating property market is bad across the board for China and international companies as the property sector accounts for about 15.0% of China's economy. This may cripple demand in over a total of 40 sectors from steel to cement to furniture. However, domestically, new home sales are actually showing some marginal improvement, which is a great sign for the broader economy.

In the US, there appears to be a slight improvement in new home sales, which bodes well for the housing sector in general. New home sales in are currently at an annual rate of 467,000 and topped the surge in August, which was declined lower from 504,000 to 466,000. Nevertheless, this rate is the best of the recovery so far going back to July 2008. Some note that price concession may be a factor behind the gains over the last two months. The median price of a new home plunged by a monthly 9.7% to an average price of $259,000. Year-over-year, this rate is in the minus column for only the second time in the last four years, currently at -4.0%. Prior to September, the year-over-year price was trending upward in positive single digits. New home supply is currently stable at 207,000 new homes on the market compared to 204,000 units in August. However, supply relative to sales remains unchanged at 5.3 months.

Regionally, the Midwest posted the largest monthly gain at 12.3% while the largest market, the South, gained 2.0% in September. As the chart below clearly demonstrates, total sales in the South far exceed all other regions combined. The West was the only region to show any declines as new home sales were down by 8.9%. However, this isn’t too concerning following a whopping gain of 28.1% in August. Ultimately, we note that the new home sales report is always volatile, but the revision lower in August averages out the volatility this time around. Thanks to lower mortgage rates and an improving jobs market, new home sales are moving in the right direction.