Recovery uncertain, US home sales tumble

The nascent global economic recovery falls into more uncertainty as latest revealed numbers show U.S. home sales tumbled by more than 16 percent in December.

Sales of previously owned U.S. homes suffered a record drop last month as the boost from a popular tax credit waned, raising doubts the housing market recovery can be sustained.

The National Association of Realtors said on Monday that existing home sales fell 16.7 percent in December to an annual rate of 5.45 million units. It was the sharpest decline on records dating to 1968.

"Today's numbers clearly indicate that the rebound in housing demand observed so far has been largely supported by government programs and therefore that the economic recovery is far from becoming self-sustaining," said Anna Piretti, an economist at BNP Paribas in New York.

There were, however, some encouraging signs, with the median home price rising in December in the first year-over-year gain since August 2007 and a decline in the inventory of homes available for sale.

U.S. stocks brushed aside the data, rising after three days of losses as signs that Ben Bernanke would win Senate backing for a second term as Federal Reserve chairman eased anxiety among investors.

Housing has been recovering from a three-year slump, driven by a tax credit for first-time buyers and low mortgage rates. The tax credit, which had been scheduled to end in November, was expanded and extended until June 2010.

Analysts said the extension should boost sales in months ahead but saw risks if it were phased out. Data ranging from pending home sales to builders sentiment have raised concerns that the housing market, which has been at the core of the worst U.S. economic downturn since the 1930s, might be slipping again.

Existing U.S. home sales for the whole of 2009 rose 4.9 percent, the Realtors group said. Prices fell 12.4 percent, which the trade group said was "probably the largest annual drop since the Great Depression."

People's Daily Online-Agencies