Existing home sales surged in December

By @ibtimes on

U.S. home resales jumped more than expected in December despite bad weather as sellers cut prices, offering some hope for a sector that has been struggling to recover from its worst slump in modern history.

Existing home sales soared 12.3 percent to an annual rate of 5.28 million units, the National Association of Realtors said on Thursday, far surpassing forecasts for a rise to 4.85 million. Sales were down 2.9 percent compared to a year earlier.

A jump in mortgage rates may have forced some buyers into the market by raising concern of even further increases, said Lawrence Yun, chief economist at the NAR. Yun said he expects 2011 sales to total around 5.2 million units, with prices remaining stable.

Sales peaked above 7 million units in September 2005, as the housing bubble reached fever pitch. They hit a 15-year low below 4 million units in mid-2010 after the market collapsed, triggering a widespread financial crisis.

Median home prices fell to $168,800, down from $170,200 in November and the lowest since February 2010. That was in part because properties considered distressed accounted for 36 percent of sales, up from 33 percent in November.

The U.S. economy has been growing for over a year, having emerged from its deepest recession in generations in the summer of 2009. Gross domestic product expanded 2.6 percent in the third quarter, not enough to put a significant dent on the nation's elevated 9.4 percent jobless rate.

A weak job market could thwart housing activity further by denting consumer confidence. Still, jobless claims dropped more than anticipated in a separate report from the Labor Department, an encouraging sign that conditions are improving.

(Editing by Theodore d'Afflisio).

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