US home sales see surprise rise

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US home sales unexpectedly rose in December as buyers took advantage of much lower house prices, industry figures have showed.

Sales of existing homes rose 6.5% to an annual rate of 4.74 million, up from 4.45 million units in November, the National Association of Realtors said.

Analysts had been expecting December sales to total 4.4 million.

For 2008 as a whole, sales fell 13.1% to 4.91 million units, the worst year in a decade.

"It appears some buyers are taking advantage of much lower home prices," said Lawrence Yun, the association's chief economist.

"Buyers will continue to have an edge over sellers for the foreseeable future."

The association said that existing home prices fell by 15.3% in December from the same period a year earlier, with 45% of transactions viewed as "distress sales", where the seller was forced to sell at a discounted price.

2009 rebound?

The rise in home sales was also down to a fall in the number of unsold homes on the market.

However, analysts said that this trend could reverse, as sellers were likely to resume putting their homes up for sale in the spring.

"The bottom line is that existing home sales have weakened markedly following the credit market seizure in September," said Paul Ashworth, senior economist at Capital Economics.

"The subsequent decline in mortgage rates may spur a rebound in 2009, but nothing is guaranteed," he added.

New home construction has also been hit by the economic slowdown.

Housing starts in the US fell by 15.5% in December to hit an all-time low, official statistics released last week showed. The rate of new construction was down 45% from December 2007.