U.S. home sales registered their biggest monthly jump in nearly seven years in December, as cratering prices began to draw out more buyers and several major housing markets showed some signs of stabilizing.

The 6.5% rise in sales from November was attributed in part to strong sales of foreclosed homes. Economists say it is too early to suggest that broad improvement is at hand, though, and warned that the spring buying season is likely to be sluggish amid growing economic hardship. Indeed, the employment picture continued to darken Monday as U.S. employers announced at least another 65,000 layoffs. (See related article.)

Investors nonetheless seized on the whiff of good housing news, sending the Dow Jones Industrial Average up more than 100 points before it retreated to close up 38.47 points, or 0.5%, at 8116.03.

The National Association of Realtors said sales of previously occupied single-family homes, condominiums and cooperative homes reached a seasonally adjusted annual rate of 4.74 million units in December. Last month's rise was the largest since the early phase of the housing boom in January 2002 and a sharp rebound from the prior month, when sales plunged 9.4%, according to revised data from the Realtors.

But home sales were still down 3.5% from a year earlier. The trade group said 45% of transactions completed in December were "distress sales" by banks unloading foreclosed properties or homeowners selling for less money than they owe to lenders.