New single-family home sales rose in October and the supply of homes on the market fell to its lowest level since April of last year, showing some healing in the battered housing sector.

The Commerce Department on Monday said that sales edged up 1.3 percent to a seasonally adjusted 307,000-unit annual rate, which was the fastest pace in five months yet still below analysts’ expectations.

The supply of new homes in the market would last 6.3 months at the current pace of sales.

The data fueled hopes the market for homes could at least be bottoming out following the previous decade’s boom and bust in the housing sector.

“This looks like a bottom. The market is stabilizing,” said Gregory Miller, an economist at Suntrust Bank in Atlanta.

Prices for U.S. stocks opened sharply higher on hopes that fresh proposals could be emerging out of Europe to help solve the region’s debt crisis.

Source: Reuters/Jason Lange