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US existing home sales hit 5-month low on thin supply, higher prices

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Washington (AFP)

Sales of existing US homes -- the largest part of America's sprawling housing market -- hit a five-month low in November amid tight supplies and ever-increasing prices, according to industry data released Thursday.

The decline erased October's gains, but nevertheless left home sales in healthy shape, given the recovery since the spring.

Economists say the housing sector is a bright spot in the world's largest economy as the summer's recession fears fade.

Total sales of single-family houses, townhomes, condos and co-ops fell 1.7 percent from October to an annual rate of 5.35 million, seasonally adjusted, according to the National Association of Realtors.

Economists had expected a slight increase, as would-be home owners are drawn to the market by attractive mortgage rates, rising wages and low unemployment.

The sales pace, while the slowest since June, was still up 2.7 percent from November of last year.

NAR's chief economist Lawrence Yun said the decline was more noise than signal.

"Sales will be choppy when inventories are low but the economy is otherwise performing very well with more than 2 million jobs added in the past year," he said in a statement.

Total housing inventories sank for the fifth straight month, dropping 7.3 percent from October to 1.64 million units. That amounts to a 3.7-month supply at the current sales pace.

But government data in recent months have pointed to a pickup in construction as home builders respond to strong demand and rising prices.

And home prices rose for the 93rd straight month, with the median price jumping 5.4 percent from the year-ago level to $271,300.

Ian Shepherdson of Pantheon Macroeconomics said the outcome was "mildly disappointing," and the low inventory might result in erratic month-to-month changes.

Despite the November dip, "the rising trend in mortgage applications points clearly to higher sales over the next few months," he said in an analysis.

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