US home sales see surprise rise

Economists had expected existing home sales to fall

US home sales unexpectedly rose in February, the first increase in seven months, but prices posted a record fall, industry figures show.

The National Association of Realtors (NAR) said that sales of existing homes rose 2.9% in February to an annual rate of 5.03 million units.

The median home price fell 8.2% from a year ago to $195,900, the biggest fall since records began in 1968.

Analysts said the data was a sign that the US housing market was stabilising.

In January, sales of existing homes hit a nine-year low and economists had been expecting sales to fall again in February.

"It's clearly a positive indication," said Pierre Ellis, senior economist at Decision Economics in New York.

"It does seem as if we can tentatively call a bottom in existing home sales. There is price weakness, but that was a given."

The Federal Reserve has cut interest rates substantially since September when the slump in the housing market and its effect on financial markets first became clear.

"The relationship between home prices, interest rates and income has improved to the point where buyers are more serious about making offers," said Lawrence Yun, NAR chief economist.