Sales of existing US homes rose slightly in November, though activity in the crucial southern market remained depressed in a sign that the nationwide market has yet to reach its nadir.

The National Association of Realtors said on Thursday that sales of all existing homes rose 0.6 per cent in November – the second consecutive monthly rise – with median prices dipping slightly and the inventory of unsold properties also dropping 1 per cent from recent highs.

The data follow a small rise in sales of new homes during November suggesting that falling prices and rising incentives are tempting buyers back to the market, eroding what homebuilding executives view as the “bad psychology” affecting the business.

However, most of the rise in existing-home business was driven by sales in the north-east, and volumes continued to fall in the south of the country, which accounted for 38 per cent of nationwide transactions in 2005.

The south and west of the US also account for three-quarters of new-home sales, and analysts remain concerned about the pace of building in the two regions, despite signals from homebuilders that they were cutting construction following the exit of speculative buyers from the market.

Most of the large homebuilders believe the excess inventory will not be cleared until the second half of next year, paving the way for a recovery in the broader market in 2008.

The NAR was more bullish in its assessment of the housing market, which is being closely monitored by policymakers because of its potential spillover into a slowing US economy.

The association suggested the November data provide evidence of “a turn in the market”, with lower median prices driving a gradual rise in sales in 2007.

“It looks like we may have reached the low point of the current cycle in September,” said David Lereah, NAR chief economist, in a statement accompanying the November data.

However, falling mortgage applications and the slight rise in new-home sales last month have left other analysts more cautious.

Gregory Gieber at AG Edwards said in a report that the new-home statistics were “uninspiring” and fell “well short of “significantly reducing the industry’s current inventory overhang”.

The supply of new homes still remains above six months, at current sales rates, while the existing-home inventory dipped to 7.3 months in November from 7.4 months the previous month, well above the five-month level a year ago. The supply of condominiums and multi-family homes still remains above nine months.

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