US housing market stabilises in December The US housing market finished 2011 on a stronger note, with sales of previously owned homes rising the most in December since the beginning of the year. Sales were up 5 per cent last month to an annual rate of 4.61m, the National Association of Realtors said, compared with a downwardly revised 4.39m in November. The third straight month of gains was not as strong as the 4.65m forecast by economists, but the continued acceleration of the market suggests that the troubled real estate sector may have finally bottomed. "The pattern of home sales in recent months demonstrates a market in recovery," said Lawrence Yun, NAR chief economist. Record low mortgage interest rates, job growth and bargain home prices are giving more consumers the confidence they need to enter the market. The growth in sales helped bring down the inventory of homes for sale to a six-year low of 2.38m, a 9.2 per cent decline from the previous month. At the current pace of sales, it would take just over six months to sell all those homes, compared with 7.2 months in November. "The inventory supply suggests many markets will see prices stabilise or grow moderately in the near future," Mr Yun said. The median price for a resale rose in December to $164,500, but was 2.5 per cent below year-ago levels. The relatively low cost of homes continued to reflect the pressure of an outsized inventory of properties on the market, many of which are being sold at steep discounts. Last month, the NAR said it had revised its figures for sales and inventories from 2007 through 2010 downward by 14 per cent, suggesting that the real estate downturn was even sharper than originally thought. Economists said Friday's report was a broadly positive signal about the housing market. "At this point it's not only the level of sales but the direction of sales so that certainly does offer some encouragement going forward," said Millan Mulraine, senior strategist at TD Securities. If rates continue to be at record lows and we see improvement in the labour market then that's certainly bullish. A survey this week from the National Association of Home Builders showed confidence in the housing market rose for a fourth month in January to the highest level since June 2007. However, sentiment still remains at recession levels, and the overhang of cheap foreclosed properties and homes still in banks" foreclosure pipelines is likely to keep new building activity at low levels. On Thursday, the labour department said new groundbreakings fell more than expected in December on a sharp decline in construction of new multi-family units.