New US single-family home sales raced to their highest level in eight months in December while prices were the highest since April 2008, raising cautious optimism for a housing market recovery.
The US Commerce Department said today that sales jumped 17.5% to a seasonally adjusted 329,000 unit annual rate after a downwardly revised 280,000-unit pace in November.
Economists, who had expected new home sales rise to a 300,000-unit pace last month, took the fairly upbeat report as a tentative sign of a turnaround in the troubled housing market. November sales were previously reported at a 290,000 unit rate.
The report is the latest in a series to suggest the economic recovery is gaining strength and broadening out. Data last week showed a surge in sales of previously owned homes in December, but progress could be frustrated by a glut of homes from an unrelenting wave of foreclosures.
But the new home sales report showed supply is gradually being reduced as sales rise. The supply of new homes on the market fell to 6.9 months' worth, the lowest since April, from 8.4 months' worth in November.
There were 190,000 new homes available for sale in December, the lowest in 43 years, the figures show.
The average sales price for a new home increased 12.1% last month from November to $241,500, the highest since April 2008. Compared with December last year, the average price rose 8.5%, the biggest increase since August.
Separately, applications for home mortgages, seen as a gauge of home demand, slumped last week as bankers recorded the slowest refinancing activity in more than a year.
The Mortgage Bankers Association's index of mortgage application activity dropped 12.9% in the week ended January 21.
Obama calls for corporate tax cut
US President Barack Obama has called on lawmakers to work with him to cut the country's corporate tax rate, but his pitch to offset lost revenues by slashing tax breaks cherished by companies could stall the effort.
'I'm asking Democrats and Republicans to simplify the system. Get rid of the loopholes,' Mr Obama said in his State of the Union address.
'A parade of lobbyists has rigged the tax code to benefit particular companies and industries.'
Mr Obama said the United States could not afford to make permanent lower tax rates for the wealthiest 2% of Americans.
He had proposed cutting tens of billions of dollars in corporate tax preferences in his first two budgets, and yesterday he repeated his call for eliminating what he termed loopholes.
Among the business tax benefits Obama wants to scrap are those letting companies defer taxes on income earned abroad.
Corporate America - especially pharmaceutical and technology companies and multinationals like General Electric Co - prize these tax provisions.
Big US service companies with little presence abroad - for example health insurance companies - would benefit most from a rate cut, because they tend to pay close to the top 35% rate.
While some companies would see lower rates from a corporate tax cut, others, such as those that do extensive business abroad, might see taxes rise.
