New-Home Sales Rise, but Off 17.3% for '06

New-home sales jumped 4.8% in December after a 7.4% rebound in November, but builders still experienced a 17.3% drop in sales last year -- the largest drop in 16 years.The U.S. Census Bureau reported that the sales of new single-family homes rose from a seasonally adjusted annual rate of 1.07 million in November to 1.12 million in December. "I think the market has reached a floor," Wells Fargo Bank senior economist Eugenio Aleman said, adding that he expects home sales to stabilize at current levels. "My biggest concern is that the Federal Reserve might have to raise interest rates, which could push mortgage interest rates higher. That is the biggest risk," he said, which could push home sales a bit lower and make it difficult for homeowners to refinance and increase foreclosures. The Census Bureau reported that inventory of unsold new homes edged down to a 5.9-month support level in December, the lowest level since last January. However, builders' inventories are "still very high," the Wells Fargo economist said, and that will "keep the new construction market weak for the rest of the year."