27 October 2010 Last updated at 10:53 ET

US new home sales pick up speed

Sales of new homes in the US rose 6.6% in September to a seasonally-adjusted annualised rate of 307,000.

The figure beat market expectations of a rise to just 300,000.

However, the rate is still 21.5% below the level of a year ago and near historic lows.

Meanwhile, the US Treasury's head of housing said that an investigation into faulty foreclosure documentation may hold up the sale of thousands of repossessed houses for months.

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"This would hurt homeowners and home buyers alike at a time when foreclosed homes make up 25% of home sales," Phyllis Caldwell, chief of the Treasury's Homeownership Preservation Office, told the Congressional Oversight Panel in prepared testimony.

"Together, these two factors may exert downward pressure on overall housing prices both in the short and long-run."

She said that the investigation would delay the sale of thousands of vacant homes, and may also raise question markets over the legal ownership status of other foreclosed properties, making their sale more difficult.

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The basic message coming through is the extremely depressed state of the housing market is continuingâ€