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Ahead of the Bell: New Home Sales

US new home sales likely rose last month after being held back by Superstorm Sandy

Associated Press

WASHINGTON (AP) -- U.S. sales of new homes probably rose in November from October, adding to evidence that the housing market is in a sustained recovery.

Economists forecast that new homes sold last month at a seasonally adjusted annual rate of 380,000, according to a survey by FactSet. That would be a 3.2 percent increase from October.

The Commerce Department will release the report at 10 a.m. EST on Thursday.

New home sales dipped slightly in October, mostly because of Superstorm Sandy. Sales are 17.2 percent higher than they were a year ago but are still below the annual rate of 700,000 that economists consider healthy.

Steady job gains this year and ultra-low mortgage rates have boosted sales of both newly built and previously occupied homes this year. More people are looking to buy or rent a home after living with relatives or friends during and immediately after the Great Recession.

Another big reason for the rebound is that the excess supply of homes that were built during the housing boom has finally thinned out. The number of previously occupied homes available for sale has fallen to an 11-year low. The inventory of new homes is also near the lowest level since 1963.

Home prices nationwide increased in October compared with a year ago, according to the S&P/Case-Shiller 20-city home price index, released Wednesday.

And sales of previously occupied homes rose to the highest level in three years in November, the National Association of Realtors said last week.

Meanwhile, the pace of home construction slipped in November but was still nearly 22 percent higher than a year earlier. Builders are on track this year to start work on the most homes in four years.

Builder confidence rose in December for a seventh straight month to the highest level in more than 6½ years, according to a survey released last week by the National Association of Home Builders/Wells Fargo.

Though new homes represent only a small portion of the housing market, they have a disproportionate impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to statistics from the National Association of Home Builders.

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