The U.S. housing sector has shown some signs of recovery with strong gains reported in sales of new homes in December, according to an official data released by the Commerce Department. The data indicated that new orders for costly manufactured goods in December have increased considerably and now an improved strength can be expected in some soft economic sectors. However, amidst these positive figures, the Commerce Department signaled that Federal Reserve is unlikely to cut interest-rate.
According to the figures, new-home sales shot up 4.8 percent in December to a yearly pace of 1.12 million units. The sales of new homes decreased in 2006 by the largest amount in 16 years and the sector was badly hit after five years of robust growth, the Commerce Department said.
However, the market bounced back in December, as new home sales were up considerably by 4.8 percent following a 7.4 percent rise in November. The Commerce Department revealed that the backlog of new homes standing empty fell to its lowest level since the start of last year creating an inventory to meet the demands for around six months.
The drop in excess inventory had forced experts and economist to come close to think that market had dived to the lowest level. Moreover, figures for the entire year showed the extent of the slowdown in 2006 in terms of sales of new homes were down by 17 percent than the previous year.
This sudden slowdown last year had inflicted serious repercussions on the economy as it prompted jobs cuts and reducing demand for construction machinery.
