New home sales stalled in September to just 0.2% growth, following the previous month’s downwardly revised jump of 10%. Analysts think this is more an outlier than a trend, but any optimism is heavily qualified.

“The supposed momentum in sales seen in August was severely deflated after revisions, with September's minimal rise suggesting limited activity in the housing market at the end of Q3,” said Lindsey Piegza, chief economist for Sterne Agee.

“The story remains unchanged - consumers, strapped with debt and minimal savings, are struggling to afford large purchases without significant income growth,” she said. “Despite record low rates keeping housing affordability relatively high, new demand, particularly among the youngest generations, remains restrained.”

Paul Diggle, property economist with Capital Economics, is a little more optimistic.

“With the economic backdrop still favorable and mortgage rates low, we expect sales will resume their upwards trend soon,” Diggle said. “Even after the revisions, the level of sales is the highest since mid-2008.”

Sales growth was particularly strong in the Midwest, with an increase over the month of 12.3%, Diggle noted.

That is in contrast to data on existing sales, which showed the Midwest as the only region to see a drop in sales in September.

“But it must be remembered that regional sales figures are very volatile – for example, new home sales were flat in the Midwest in August, but jumped by almost 43% in the Northeast,” he said.

“Given low mortgage interest rates, loosening mortgage credit conditions and job creation well in excess of 200,000 per month, the fact that new home sales have stalled once again is something of a disappointment. It is possible that mortgage lenders are still wary about advancing finance on new homes, which tend to be sold at a premium to existing properties. Indeed, while existing home sales are edging their way back towards pre-crisis norms, new home sales still have a very long way to go.”

Despite little underlying growth in housing starts so far this year, the lackluster performance in sales also helped to push the stock of homes for sale up for the seventh consecutive month to 207,000, the highest level for over four years.

Diggle says that will weigh on house price pressure, and argues against any return to double-digit house price growth any time soon.

“Low mortgage rates and further increases in employment should help sales activity to rise steadily over the coming months. Moreover, with evidence that the land and labor shortages faced by homebuilders are now easing, supply should be able to respond to the rise in demand,” he said. “That should prevent a sharp rise in prices from choking off the recovery.”