New home sales rise to three-year high in 2012

Sales of new single-family homes rose last year to the highest level since 2009, a sign the troubled U.S. housing market has turned a corner.

Americans bought 367,000 new single-family homes in 2012, up 19.9 percent from the prior year, the Commerce Department said on Friday.

Sales hit a nearly three-year high in November, before pulling back somewhat in December, it said.

The housing sector has been a point of strength in the economy over the last year, and Friday’s data reinforced expectations it will help offset the economic damage from tax hikes enacted this year.

“Overall the stage is set for more home building,” said Michelle Meyer, an economist at Bank of America Merrill Lynch in New York.

Momentum appeared to be growing in the U.S. economy at the close of 2012, helped by consumer spending. A measure of future U.S. economic growth from the Economic Cycle Research Institute picked up last week to its highest level since April 2011.

Still, a government report next week is expected to show economic growth slowed in the fourth quarter as businesses worked off inventories and the trade deficit widened.

The economic data appeared to have little impact on financial markets. U.S. stocks rose, buoyed by sturdy corporate earnings from Procter & Gamble and Honeywell, with the S&P 500 poised for its longest winning streak in more than eight years.

Economists think home building added to economic growth last year for the first time in seven years. That boost was likely quite modest because housing is a much smaller part of the economy than it was before the 2007-2009 recession.

The number of sales in 2012 was still only about a third of the record number sold in 2005, before a housing collapse that helped trigger a financial crisis.

In December, sales dropped 7.3 percent to a seasonally adjusted 369,000-unit annual rate. That was below analysts’ forecasts of a 385,000-unit annual pace.

However, the department raised its estimate for sales in November by 22,000 to a 398,000-unit rate, making the pace of sales that month the fastest since April 2010.

Also adding some luster to the report, the median price for a new home rose to $248,900 in December from $245,600 in November, according to figures that are not adjusted for seasonal swings.

“I’d say this is a relatively strong housing number,” said Omer Esiner, an analyst at Commonwealth Foreign Exchange in Washington.

In December, sales cooled in three of the four major regions tracked by the government, climbing only in the Midwest.

“This should prove to be a temporary blip as the U.S. housing market continues its gradual recovery,” said Andrew Grantham, an economist at CIBC World Markets in Toronto.