WASHINGTON: Purchases of new homes in the US climbed 11per cent last month, the biggest gain in eight years, adding to evidence the slump that began in 2005 is stabilising.
But prices are still falling.
Sales increased to a 384,000 pace, higher than any forecast of economists surveyed by Bloomberg News and the most since November, figures from the Commerce Department showed yesterday.
The number of houses on the market dropped to the lowest level in more than a decade.
Falling prices and near record-low mortgage rates have started to lure buyers even as the unemployment rate rises. The worst recession in five decades may end in coming months as the downturns in housing and manufacturing ease.
'Things are bottoming,' Mr Jonathan Basile, an economist at Credit Suisse in New York, said before the report. The gain 'continues that notion of stabilisation, but it's going to be difficult for builders to be selling at a much more rapid rate until the foreclosure issue subsides.'
The median price of a new home fell 12per cent to US$206,200 (S$297,000) from US$234,300 in June last year. Last month's value compares with US$219,000 in May.
Sales of new homes were down 21per cent from June last year. They reached a record-low 329,000 in January.
The jump in sales last month was led by a 43per cent surge in the Midwest. Purchases increased 29per cent in the North-east and 23per cent in the West. They dropped 5.3per cent in the South, to the lowest level since January 1991.
Builders had 281,000 houses on the market last month, down 4.1per cent from May and the fewest since February 1998. Unsold inventory fell a record 36per cent from June last year. It would take 8.8 months to sell all homes at the current sales pace, the lowest level since October 2007.
Underscoring the stabilisation, the Wells Fargo/National Association of Homebuilders sentiment index has risen in five of the past six months and existing home sales have increased for three months in a row.
Source: Straits Times, 28 July 2009