Signs of revival in US housing sector
By North America correspondent Lisa Millar and wires
Figures released in the US indicate the housing market may be starting to recover, with new home sales soaring in June.
In an increase that took economists by surprise, the June hike in new home sales was the biggest in more than eight years.
Economists had predicted sales would climb 2.3 per cent, but instead the figures showed an 11 per cent jump for single family homes, the third increase in a row.
The housing crisis in the US has been the focal point of the recession and this increase is being seen as evidence the market might be finally recovering from its worst downturn in decades.
Sales prices fell, however, suggesting builders have been cutting prices to clear inventory.
The median sales price fell to 206,200 from 219,000 a month earlier, and the median length of time homes were on the market was a record 11.8 months.
The number of new homes for sale at the end of June was estimated at 281,000 - a supply of 8.8 months at the current sales rate.
That was down from a glut of 10.2 months in May and 12.4 months in January, when home sales fell to their lowest level since statistics began in 1963.
The report was the latest to suggest the battered housing sector and overall economy may be on the mend after a brutal slump.
Last week, the National Association of Realtors said sales of US existing homes rose for the third consecutive month in June - up 3.6 per cent to a rate of 4.89 million units.
Mixed messages
Economist Michelle Meyer at Barclays Capital said the rise in new home sales was the largest monthly increase since December 2000.
"The normalisation in the new housing market is underway, which is a precondition for new homebuilding," she said.
Others said it was too soon to talk about a recovery.
"Since prices have continued weak, it is hard to call this a signal of a turn higher," said Robert Brusca at FAO Economics.
Patrick Newport, economist at IHS Global Insight, said the report was mixed.
"Although the market for new homes is improving, selling a new home has never been harder," he said.
"The median time that a new home sits on the market before selling rose to an all-time high of 11.8 months. The number is rising because builders must cover their costs, and do not have the option of selling homes at 'fire sale' prices."