US existing home sales rise 0.4% in November
Posted: 31 December 2007 2332 hrs

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WASHINGTON : Existing home sales in the United States rose 0.4 percent in November, breaking an eight-month streak of declining sales, industry figures showed on Monday.

The National Association of Realtors (NAR) said sales of existing single-family homes and apartments climbed to a seasonally adjusted rate of 5.0 million units, matching analysts' consensus forecast.

The October sales pace was revised upward to 4.98 million units from 4.97 million, a nine-year low.

November sales are 20 percent below the 6.25 million-unit level in November 2006, but indicate the beginnings of stabilisation in the troubled housing market, the industry group said.

"Near term, existing-home sales should continue to hover in a narrow range, just as they have since September, and that's good news because it'll be a further sign that the housing market is stabilising," said Lawrence Yun, NAR chief economist.

"Mortgage interest rates are near historic lows and the most current data shows decelerating price declines, along with a modest reduction in the number of homes on the market."

The national median price for existing homes was US$210,200 in November, down 3.3 percent from November 2006 when the median was US$217,300, NAR said.

Total existing homes inventory declined 3.6 percent at the end of November to 4.27 million units for sale, which represents a 10.3-month supply at the current sales pace.

The overhang was a 10.7-month supply in October.

"Inventory is still high, and further reduction in prices may be required in some areas to induce buyers back into the market," Yun said.

The weak improvement in November came in the context of a housing meltdown since mid-2006 as a years-old boom market collapsed.

The uptick followed further dismal reports last week that raised investors' concerns that the housing depression could drive consumers to curb spending, which accounts for two-thirds of US economic activity.

The Commerce Department reported Friday that sales of new homes plunged nine percent in November from the prior month to the slowest pace since April 1995.

That data came followed the Standard & Poor's/Case-Shiller home price index on Wednesday that showed home prices fell in October for the 10th consecutive month, posting their largest drop since early 1991.

The Federal Reserve has lowered its federal funds rate by one percentage point in three moves since September in a bid ease a credit crunch linked to the housing slump.

The credit freeze was initially triggered by a crisis in sub-prime mortgages, where loans were given to home buyers with poor credit histories.

As credit tightened and home prices declined, those risky borrowers increasingly defaulted, leading to a widening of the credit squeeze in the markets. - AFP/ch/de