Sales of new homes in United States picked up in November following a big drop in October, while the backlog of unsold homes on the market became somewhat smaller, according to the latest report from the Commerce Department released Wednesday.
The news helped pull Wall Street to another all-time high, with the Dow Jones industrial average rising more than 100 points to finish Wednesday above 12,500 for the first time. However new house sales are still 15% lower than a year ago. The Commerce Department reported that sales of new single-family home rose 3.4% in November to a seasonally adjusted annual rate of 1.047 million units. In October sales declined 3.8%. Housing which had been one of the US economy's leading performers has been battered this year with rising interest rates and potential buyers balking at paying prices which have surged to record levels, reflecting five boom years for sales. The housing slowdown has had a major impact on the overall US economy, shaving 1.2 percentage points from growth in the July-September period and probably an equal amount from growth in the current quarter. The overall economy expanded at a very modest annual rate of just 2% in the third quarter with growth in the final three months of the year expected to come just slightly better. The Commerce Department also reports that the backlog of unsold new homes on the market declined to a 6.3-month supply in November, down from a 6.7-month supply in October. But that is still far higher than November 2005, when it would have taken 4.9 months to sell all the unsold homes on the market. The median price of a US home rose 5.8% from November 2005 to 251,700 US dollars. But rather than reversing the recent downward momentum economists said the up turn was likely the result of a rise in sales for the month in the Northeast and the West, where homes are more expensive. In November, sales in the Northeast climbed 22.5% compared with October, while the West saw a 19% jump.