Reuters reported that sales of new homes rebounded strongly in June 2010 from May's record low, pushing the number of houses on the market to the lowest level in nearly 42 years.

The Commerce Department said that sales of new single family homes vaulted 23.6% to a 330,000 unit annual rate. Still, the sales pace last month was the second lowest since records started in 1963.

Ms Jennifer Lee, a senior economist at BMO Capital Markets in Toronto, said that "We can't take too much joy in one month's figure. The roadblocks to a healthy housing market are high, the most important one being the still high jobless rate."

The percentage increase last month was the largest since May 1980, and it partially unwound May's historic 36.7% drop as the US housing market was roiled by the expiry of a popular tax credit that boosted sales. Analysts polled by Reuters had forecast new home sales rising to a 320,000 unit pace last month from May's previously reported 300,000 units.

While economists expect weak housing activity to act as a drag on growth for much of the year, they do not believe this would be enough on its own to trigger a double dip recession.

Housing's share of the economy has shrunk in recent years and residential construction accounted for about 2.4% of US gross domestic product in the first quarter.

According to economists at Bank of America Merrill Lynch, the impact of a 10% drop in home construction has about one-third the impact now as it did in 2006.

(Sourced from www.reuters.com)