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Sales for all of 2010 totaled 321,000, a drop of 14.4 percent from the 375,000 homes sold in 2009, the Commerce Department said Wednesday. It was the fifth consecutive year that sales have declined after hitting record highs for the five previous years when the housing market was booming.

The year ended on a stronger note. Buyers purchased new homes at a seasonally adjusted annual rate of 329,000 units in December, a 17.5 percent increase from the November pace.

Still, economists say it could be years before sales rise to a healthy rate of 600,000 units a year.

"The percentage rise in sales looks impressive but 10 percent of next-to-nothing is still next-to-nothing," said Ian Shepherdson, chief U.S. economist at High Frequency Economics, referencing the December increase. "New home sales are bouncing around the bottom and we see no clear upward trend in the data yet."

Builders of new homes are struggling to compete in markets saturated foreclosures. High unemployment and uncertainty over home prices have kept many potential buyers from making purchases.

Home prices fell in November in 19 of 20 major cities measured by the Standard & Poor's/Case-Shiller index, and nine of those cities fell to their lowest point since the housing bust.

Economists expect prices will keep falling through the first six months of this year.

Poor sales of new homes mean fewer jobs in the construction industry, which normally powers economic recoveries.

On average, each new home built creates the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the National Associated of Home Builders.

The median price of a new home rose to $241,500 in December, up from a November median of $215,500. For all of 2010, the median sales price was $221,900, up 2.4 percent from the 2009.

For December, sales rose in all parts of the country except the Northeast, which saw a 5 percent decline. Sales surged 71.9 percent in the West and were up 3.2 percent in the Midwest and 1.8 percent in the South