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New Home Sales Jump 10 Percent

As 2011 draws to an end, the housing market got a string of reports showing it may be in the midst of a recovery as we enter a new year. Existing home sales, housing starts and building permits were all reported higher this week, and Friday the Census Bureau reported that new home sales rose to a seasonally adjusted annualized pace of 315,000 in November, 1.6 percent higher than October's pace and nearly 10 percent more than the pace reported a year ago.

While sales of new homes were picking up, sales of previously occupied homes also picked up, by 12 percent on a year-to-year basis. Home builders are building more, as housing starts increased 20 percent last month, and that trend is expected to continue as requests for building permits also rose. Mortgage rates, meanwhile, fell to record-low levels this week, ensuring that affordability is still providing incentive for Americans to buy.

The median sales price for new homes sold in November was $214,000. The surge in sales fueled a decline in inventory, which is down to just under 160,000 units, or a six month supply at the current rate of sales. Economists expect the recent positive trends in housing to continue early in 2012, particularly with the national unemployment rate falling to 8.6 percent in November, and construction, which fuels so many other parts of the economy, picking up.

December 24, 2011

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