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New home sales in the USA rose last month at the fastest rate since 2005, the US Commerce Department said yesterday in a report, highlighting the case that the hammered US residential real estate market is staging a recovery. Separately, official figures showed that new orders for durable goods tallied up their biggest jump in 2 years in July, as aircraft purchases soared and the US Cash-for-Clunkers program fueled a big rise in demand for automobiles. Sales of new homes jumped by 9.6% to an adjusted annual rate of 433,000 in July. The 4th consecutive monthly rise beat even the most bullish forecasts of Wall Street analysts and exceeded the revised June jump of 9.1%. New home sales are still off by 13.4% compared with the same month a year ago. Buyers are responding to low prices and the popular 1st time home buyer tax credit which has succeeded in luring people back to the market. The median price of a new home slipped a bit to US$210,100 in July and is off by 11.5% year-on-year.

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US house prices showed their first monthly gain in three years in May offering another sign that the stricken residential real estate market is stabilizing. Home prices unexpectedly climbed by 0.5% from April to May, but were off by 17.1% year-on-year, according to the closely watched Case-Shiller index, released on Tuesday. The monthly rise was the first since prices peaked in July 2006, while the annual drop marked the fourth straight month that the rate of decline slowed after 16 consecutive months of record falls.

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Losing sleep on commercial property US commercial real estate problems could derail the country’s economic recovery later this year, a top Federal Reserve official said on Monday. “Many banks are pretty heavily exposed to commercial real estate. It is also a big part of the securitization market.

So commercial real estate is one that concerns me,” said Federal Reserve Bank of Atlanta President Dennis Lockhart. Lockhart, a voting member of the Fed’s policy-setting committee this year, said that around US$400B of commercial real estate refinancing was hanging over the market and he was monitoring its progress with care.

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