(Adds housing data)
* Durable goods orders rise 3.5 percent in November
* Core capital goods orders rise 4.5 percent
* New home sales fall modestly, October sales revised up
WASHINGTON, Dec 24 (Reuters) - Orders for long-lasting U.S. manufactured goods surged in November and a gauge of planned business spending on capital goods recorded its largest increase in nearly a year, pointing to sustained strength in the economy.
While another report on Tuesday showed new home sales slipped in November, sales in October were revised to show the highest pace in more than five years. In addition, house prices rebounded, underscoring the economy's improving fundamentals.
The Commerce Department said durable goods orders jumped 3.5 percent last month as demand increased for a range of goods from aircraft to machinery and computers and electronic products.
The increase, which outpaced economists' expectations for a 2 percent rise, more than reversed October's 0.7 percent drop. Excluding transportation, orders rose 1.2 percent, the largest increase since May.
Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, surged 4.5 percent, breaking two straight months of declines. It was the largest increase since January.
Economists had expected orders for so-called core capital goods to increase 0.7 percent in November after a 0.7 percent fall in October. The report suggested strength in manufacturing and was further evidence of a firming economic growth outlook.
"It's encouraging after the declines we had seen with the core capital orders the past couple of months. Sentiments were showing things were good but not the hard numbers. Things seemed to have turned now," said Sam Bullard, senior economist at Wells Fargo Securities in Charlotte, North Carolina.
From consumer spending to employment and trade, the foundations appear to be in place for sustained and strong economic growth in 2014.
In a second report, the Commerce Department said new home sales fell 2.1 percent to a seasonally adjusted annual rate of 464,000 units. However, October's sales were revised to a 474,000 unit pace, which was the highest level since July 2008.
Despite the fall, home sales retained the bulk of the previous month's 17.6 percent increase.
The data support the U.S. Federal Reserve's decision last week to start trimming back its monthly bond purchases from January, a process which is likely to continue for much of next year.
GROWTH OUTLOOK BRIGHT
U.S. Treasuries prices fell with benchmark yields hovering near three-month highs as investors trimmed their bond holdings ahead of a shortened session before Christmas. U.S. stocks were little changed.
The durable goods orders report showed that shipments of core capital goods, which are used to calculate equipment spending in the government's measure of gross domestic product, increased 2.8 percent last month.
That was the largest increase since March 2012. Shipments had dropped in September and October and last month's increase could see economists bumping up their fourth-quarter GDP estimates.
The housing market is helping to boost manufacturing through demand for building materials and household appliances. Housing momentum has slowed somewhat because of higher mortgage rates. Applications for home mortgages fell for a second week to hit a 13-year low last week, another report showed.
But home sales are expected to accelerate next year, driven in part by employment gains. Continued recovery in household formation from multi-decade lows, against a backdrop of lean housing inventory, is also expected to boost activity.
Median prices rose to their highest level in seven months, up more than 10 percent from a year earlier, to $270,900.
Last month, durable goods orders rose almost across the board, with notable gains in transportation.
Transportation equipment orders increased 8.4 percent after falling 3.5 percent. Civilian aircraft orders jumped 21.8 percent and orders for motor vehicles recorded their largest increase since February.
Outside transportation there were gains in orders for computers and electronic products, machinery and fabricated metal products, among others.
(Reporting by Lucia Mutikani; Additional reporting by Richard Leong; Editing by Krista Hughes)