WASHINGTON: A jump in sales of previously occupied homes and further gains in home construction suggest the U.S. housing recovery is gaining momentum.
Sales rose 7.8 percent in August from July to a seasonally adjusted annual rate of 4.82 million, the National Association of Realtors said Wednesday. That’s the highest level since May 2010, when sales were aided by a federal home-buying tax credit.
At the same time, builders broke ground on 2.3 percent more homes and apartments in August than July. The U.S. Commerce Department said the annual rate of construction rose to a seasonally adjusted 750,000. The increase was driven the best rate of single-family home construction since April 2010.
The two national reports come amid other signs of steady progress in the housing market after years of stagnation. New home sales are up, builder confidence is at its highest level in more than six years, and increases in home prices appear to be sustainable.
“The U.S. housing recovery is for real,” said Sal Guatieri, an economist at BMO Capital Markets, in a note to clients. “Great affordability, pent-up demand and strong investor interest in rental units are driving the market.”
The Federal Reserve’s recently announced plan to spend $40 billion a month on mortgage-backed securities to keep mortgage rates low “can only help,” Guatieri added.
Still, home sales and housing starts are rising from depressed levels. Sales of previously occupied homes remain below the more than 5.5 million that economists consider consistent with a healthy market.
The number of first-time home buyers, who are critical to a housing rebound, slipped to 31 percent from 34 percent. In a typical market, that figure is usually closer to 40 percent. Strict credit standards are making it harder for many first-time buyers to qualify for mortgages.
There were 2.47 million homes available for sale in August. It would take just over six months to exhaust that supply at the current sales pace. That’s the typical pace in a healthy market.
Homes are selling more quickly than a year ago. The median amount of time that a home spent on the market was 70 days in August, the Realtors’ group said. A year ago, the median time frame was 92 days a year ago.
The median home price dipped in August to $187,400, but that is 9.5 percent higher than August 2011. That’s the largest year-over-year price increase since January 2006.