New home sales take a hit

WASHINGTON Sales of new U.S. homes cooled off in December compared with November, but sales for the entire year were the best since 2009.

The Commerce Department said Friday that new-home sales fell 7.3 percent last month to a seasonally adjusted annual rate of 369,000. That's down from November's rate, which was the fastest in 2 1/2 years.

For the year, sales rose nearly 20 percent to 367,000. That's the most since 2009 and the first annual gain since 2005, although that's coming off the worst year for new-home sales since the government began keeping records in 1963. Sales are still below the 700,000 level that economists consider healthy.

The housing market began to recovery last year, roughly five years after the housing bubble burst. Stable job gains and record-low mortgage rates encouraged more people to buy homes.

Sales of previously occupied homes rose to 4.65 million last year, the most in five years.

Home prices rose steadily and the gains appear to be sustainable. And builders finished their best year for residential construction since 2008.

The housing market has a long way back to a full recovery. But most economists expect the recovery will strengthen in 2013.

One reason is more people are looking to buy or rent a home after living with relatives or friends during and immediately after the Great Recession.

And the supply of both newly built and previously occupied homes for sale have dwindled. Fewer homes for sale have helped drive prices higher and made many markets more competitive.

Though new homes represent less than 20 percent of the housing sales market, they have an outside impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenues, according to data from the National Association of Homebuilders.

The gains in home building helped boost construction hiring in December by 30,000 jobs, the most in 15 months.

Still, the number of first-time buyers remains low, which has limited sales. Many are unable to qualify for historically low mortgage rates because banks have adopted tighter credit standards and are requiring larger down payments.