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U.S. existing home sales surge

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U.S. home resales jumped more than expected in December despite bad weather as sellers cut prices while jobless claims fell sharply last week, offering some hope for the economy's two key trouble spots.

Existing home sales soared 12.3 percent to an annual rate of 5.28 million units, the National Association of Realtors said on Thursday, far surpassing forecasts for a rise to 4.85 million. However, sales were down 2.9 percent from a year earlier.

In another report, applications for new jobless benefits posted their biggest decline in nearly a year, erasing a holiday-related spike to show a steady if slow improvement in the labour market. Claims retreated to 404,000 from 441,000 in the prior week, the Labour Department said.

"Most of the reports today were fairly good. For anyone skeptical about the U.S. recovery, these should ease concern," said Kathy Lien, director of research at GTF Forex in New York.

A report on Mid-Atlantic manufacturing showed a modest pullback, but its details showed some underlying strength. The Phiadelphia Fed's index of regional factory activity dipped to 19.3 in January from 20.8 in December. Prices paid jumped sharply as global commodity prices remained high.

The new orders index more than doubled to 23.6, while the survey's employment index, though still soft, reached its highest level since April 2006.

Yet another report showed an index of leading economic indicators spiking up 1 percent, above forecasts for a 0.6 percent gain.

U.S. stocks pared losses while bond prices extended their losses after the surprisingly upbeat housing data.

HOME SALES REBOUND

The rebound in home sales came despite a bout of bad winter weather across many parts of the country last month.

A jump in mortgage rates may have forced some buyers into the market by raising concern of even further increases, said Lawrence Yun, chief economist at the NAR. Yun said he expects 2011 sales to total around 5.2 million units, with prices remaining stable.

Sales in September 2005 peaked above an annual rate of 7 million units, as the housing bubble reached fever pitch. They hit a 15-year low below 4 million units in mid-2010 after the market collapsed, triggering a widespread financial crisis.

Median home prices in December fell to $168,800 US, down from $170,200 US in November and the lowest since February 2010. That was in part because properties considered "distressed" accounted for 36 percent of sales, up from 33 percent in November.

The U.S. economy has been growing for over a year, having emerged in the summer of 2009 from its deepest recession in generations. Gross domestic product expanded 2.6 percent in the third quarter, not enough to put a significant dent on the nation's elevated 9.4 percent jobless rate.

A weak job market could thwart housing activity further by denting consumer confidence.

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