Dec. 24 (Bloomberg) -- The U.S. housing market is showing signs of stabilizing after its biggest decline in 15 years, economists said before a pair of reports on home sales this week.

New-home purchases increased 0.5 percent in November to an annual rate of 1.015 million, according to the median estimate in a Bloomberg News survey of economists before the Commerce Department's report on Dec. 27. The National Association of Realtors is forecast to report the following day that sales of previously owned homes fell 0.6 percent in November after rising the month before.

The figures, while not yet pointing to recovery in the housing market, show that builder incentives, cheaper homes and lower mortgage rates are keeping the real estate slump from deepening. A housing market on firmer footing may help reduce the risk of an extended slowdown in economic growth.

``The pace of decline has really eased up a lot,'' said Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Connecticut. The reports will be ``one of a handful of straws in the wind that say we may see a halt in housing declines soon.''

Data last week showed the economy is weathering the housing downturn. Consumer spending, which accounts for two-thirds of the economy, rose 0.5 percent in November, the most in four months, while incomes increased 0.3 percent, the Commerce Department reported.

Job and Income Growth

Job and income gains helped power spending at the start of the fourth quarter, supporting the Federal Reserve's forecast of ``moderate'' economic growth that may allow policy makers to hold interest rates steady.

``All of our payments data indicate that the consumer continues to spend,'' Kennedy Thompson, chairman and chief executive officer at Wachovia Corp., said last week in Charlotte, North Carolina. ``The key to the consumer is not what happens in housing but what happens in unemployment, and we don't see the unemployment rate rising substantially.''

The jobless rate was 4.5 percent in November, close to a five-year low of 4.4 percent. Thompson said companies are less likely to reduce their workforces because ``corporate profits are strong and corporations are spending right now.''

Residential construction fell at an 18.7 percent annual rate in the third quarter, the biggest decline since the first three months of 1991, according to the Commerce Department. The drop in home construction helped slow economic growth to an annual rate of 2 percent during the quarter.

Housing Still `Weak'

``Housing subtracted a lot from growth in 2006, but we're not going to have the same story in 2007,'' said Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. The market is still ``pretty weak and it may be spilling over and affecting sentiment. So far, though, consumers continue to spend.''

The expected rise in new-home sales would follow a 3.2 percent decrease a month earlier. New housing accounts for about 15 percent of the market.

Economists consider new-home purchases a more timely barometer of the market because they are recorded when a contract is signed. Most sales of existing homes are recorded when a contract closes and reflect buying decisions made months earlier.

Applications filed with mortgage banks for home purchases have increased since the end of October. The Mortgage Bankers Association's index is up 16 percent in the last seven weeks.

Realtors' Forecast

The National Association of Realtors earlier this month forecast previously owned home sales will rise to an annual rate of 6.29 million in the first three months of 2007, snapping five straight quarterly declines.

A separate report this week is forecast to show consumer confidence declined for a third straight month in December. The Conference Board's index will decline to 102 from a November reading of 102.9, according to the median estimate in a Bloomberg survey.

                         Bloomberg Survey

Date    Time   Period  Indicator               BN Survey
Prior

12/26   10:00   Dec.   Richmond Fed. Manf.        6.0       7.0
12/27   10:00   Nov.   New Home Sales           1.015M    1.004M
12/28    8:30  Dec. 16 Continuing Claims         2500K     2520K
12/28    8:30  Dec. 23 Initial Jobless Claims    320K      315K
12/28   10:00   Dec.   Chicago Purchasers        50.0      49.9
12/28   10:00   Dec.   Confidence-Conf. Board    102.0     102.9
12/28   10:00   Nov.   Home Resales              6.19M     6.24M

To contact the reporter on this story: Vince Golle in Washington at vgolle@bloomberg.net

Last Updated: December 24, 2006 10:25 EST