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Consumer confidence, existing home sales rise

WASHINGTON - The U.S. economy is ending the year with a hopeful set of reports showing that consumer confidence soared in December and the worst of the downturn for the battered housing market may be over.

The Conference Board reported Thursday that consumer confidence shot up to an eight-month high of 109.0 in December.

That was only slightly below last April's 109.8, when confidence had hit the highest point in four years before soaring gasoline prices and a slumping housing market took their toll on Americans' perception of the future.

Meanwhile, the National Association of Realtors reported that sales of existing homes edged up 0.6 percent in November to a seasonally adjusted annual rate of 6.28 million units, after a 0.5 percent rise in sales in October.

It marked the first back-to-back increases in sales of existing homes since the spring of 2005 and followed news Wednesday that sales of new homes rose 3.4 percent last month.

The better-than-expected showing for both new and existing home sales could be signaling that this year's severe slide in housing is starting to bottom out, analysts said.

However, they cautioned not to expect a sharp rebound. Rather, they said they look for prices to continue falling for several more months as sellers are forced to trim their asking prices more in the face of near-record levels of unsold homes.

For October, the median price for an existing home fell for a record fourth consecutive month, dropping to $218,000, down 3.1 percent from a year ago.

David Lereah, the Realtors' chief economist, estimated that each 1 percent fall in home prices brings an additional 50,000 buyers into the market.

Housing had been the economy's standout performer as the lowest mortgage rates in four decades gave the country five straight years of record sales of both new and existing homes.

This year sales of existing homes should fall by about 9 percent with a smaller 1 percent decline expected in 2007, Lereah said.

He said that one-fourth of the country, the formerly hottest markets in such areas as California and Florida, will see prices decline further while the other three-fourths of the country will see sales and prices keep

rising.