WASHINGTON (AP) - More people purchased new homes in November, though not enough to signal better times are ahead for the battered housing industry.
Sales of new homes rose 5.5 percent last month to a seasonally adjusted annual rate of 290,000 units, the Commerce Department reported Thursday. That's less than half the rate that economists consider healthy. And the increase follows a dismal October sales pace that nearly matched the lowest level in 47 years.
Economists believe it could take three years to get back to a more normal rate of 600,000 sales per year given a continued glut of unsold homes and falling prices. The median price for a home sold in November fell to $213,000, 2.7 percent lower than a year ago.
Sluggish sales mean fewer jobs in the construction industry, which normally helps power economic recoveries. On average, each new home built creates the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.
High unemployment, tighter bank lending standards and uncertainty about home prices have kept people from buying homes. Government tax credits propped up sales earlier this year but those credits expired in April.
The National Association of Realtors reported Wednesday that sales in the far larger market for previously owned homes rose to an annual rate of 4.68 million units in November. Still economists expect 2010 will finish as the worst year that market since 1997.
It could be two years or more, economists say, for enough buyers to return to bring sales of previously occupied homes back to the more healthy level of 6 million in sales annually.
One major problem facing the entire housing market is the record number of foreclosed properties. Economists say a large "shadow inventory' of such homes is waiting to come on the market as banks continue to clear out a huge backlog of properties they are in the process of taking back.
The new-home sales report showed a downward revision to activity in October. That month was revised to a rate of 275,000. The all-time low of 274,000 units was hit in August.
For November, new-home sales were down the most in the Northeast, a drop of 26.7 percent, followed by a decline of 13.2 percent in the Midwest. However, sales were up 37.3 percent in the West and 5.8 percent in the South.
(Copyright 2010 by The Associated Press. All Rights Reserved.)