New home sales buoyed by rate cut

NEW home sales jumped in November in response to the Reserve Bank's interest rate cut.

The sales of new homes rose 6.8 per cent in November, following a downwardly revised increase of 2.8 per cent in October, according to the Housing Industry Association - Jeld Wen new home sales report.

While detached house sales surged 9.8 per cent, apartment sales slumped 17 per cent, HIA said today.

"Interest rate cuts, both those we've had and those that are still warranted, provide a ... catalyst for a sustained and strong recovery in new home building conditions," said HIA chief economist Harley Dale.

The Reserve Bank in November lowered the interest rate to 4.5 per cent from 4.75 per cent, in response to increased concerns about the European sovereign debt crisis slowing the global economy and hurting Australia's growth. It was the first reduction since April 2009. In December the RBA cut the key rate by another 25 basis points.