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Home Sales Fall to Lowest Level in More than 12 Years

U.S. new home sales fell a steeper-than-expected 9 percent in November, but business activity elsewhere perked up this month, according to reports Friday that showed pockets of strength in the economy despite a housing sector meltdown.

Vail Real Estate
Vail Real Estate

New single-family home sales fell to an annual rate of 647,000 in November, the slowest pace in more than 12 years, the Commerce Department said. That was down from October's downwardly revised pace of 711,000.

Analysts polled by Reuters were expecting a seasonally adjusted annual sales rate of 720,000.

U.S. stocks trimmed gains while prices for U.S. government bonds rose and the dollar was little changed against major currencies following the weaker-than-expected housing data.

The median sales price of new houses sold in November was $239,100, down slightly from $240,100 a year earlier.

Analysts and investors are looking for signs that the worst of the housing crisis is over, but Friday's data offered little reassurance. The report showed that there was a 9.3 months' supply of homes for sale, up from 8.8 months in October.

"Demand for new homes continues to fall in an environment of price uncertainty," said Joseph Brusuelas, chief U.S. economist at IDEA Global in New York.

Sales in the U.S. Midwest were particularly weak, tumbling 27.6 percent to the slowest pace since July 1991.

The new home sales report has a margin of error of plus or minus 13.9 percent, which makes it vulnerable to large revisions from month to month. The figures for August and September were both revised lower.

The median sales price of new houses sold in November was $239,100, down slightly from $240,100 a year earlier.

The report showed that there was a 9.3 months' supply of homes for sale, up from 8.8 months in October.

Manufacturing Sector Picks Up

However, outside of housing the economy looked somewhat brighter as business activity expanded in the U.S. Midwest and in New York in December, separate reports showed.

The National Association of Purchasing Management-Chicago's business barometer rose to 56.6, its strongest level since June, from 52.9 in November. Economists had forecast a reading of 51.8. Anything above 50 indicates expansion.

The National Association of Purchasing Management-New York's index rose to 449.1 in December from 445.0 in November, rising for a third straight month.

"You can say that the manufacturing sector is not falling off the cliff, and although we are seeing a slowdown (in the overall economy) at least the industrial side is going to keep supporting the economy," said Kurt Brunner, portfolio manager at Swarthmore Group in Philadelphia.

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  • Diana Olick serves as CNBC's real estate correspondent as well as the editor of the Realty Check section on CNBC.com.