Sales of existing homes up in US

Source : Business Times – 22 Aug 2009

SALES of existing US homes jumped more than forecast in July to the highest level in almost two years, signalling that the housing crisis that crippled the world’s largest economy is easing.
Purchases climbed 7.2 per cent to a 5.24 million annual rate, the most since August 2007, the National Association of Realtors (NAR) said yesterday. The gain was the biggest since records began in 1999. The median price fell 15 per cent.

‘More and more buyers are becoming convinced that there is not a lot of downside left in the housing market,’ said Ellen Zentner, a senior economist at Bank of Tokyo-Mitsubishi UFJ in New York. ‘We can count on housing no longer being a drag.’

Stocks jumped and Treasury securities dropped after the report added to evidence that the housing market was turning.

Economists had forecast that existing home sales would rise to a five million annual rate, according to a Bloomberg News survey. June’s pace was unrevised at 4.89 million.

Sales had reached a 4.49 million pace in January, their lowest level since comparable records began in 1999.

Purchases of existing homes increased 5 per cent compared with a year earlier. The median price dropped to US$178,400 from US$210,100 in July 2008.

The number of previously owned unsold homes on the market jumped 7.3 per cent to 4.09 million in July, a ‘notable’ increase, according to Lawrence Yun, NAR’s chief economist. At the current sales pace, it would take 9.4 months to sell those houses, the same as in June.

A seven months’ supply is usually consistent with stabilisation in prices, Mr Yun said last month.
The share of homes sold as foreclosures or otherwise distressed properties held to 31 per cent in July, he said.

Yesterday’s report showed that sales of existing single- family homes increased 6.5 per cent to an annual rate of 4.61 million. Sales of condominiums and cooperatives climbed 13 per cent to a 630,000 rate.

Purchases increased in three of four regions, led by a 13 per cent jump in the north-east.
Obama administration efforts to revive housing include an US$8,000 federal tax credit for first-time buyers who complete the transaction before Dec 1.

The first-time buyers accounted for about 30 per cent of sales last month and the government’s credit is having a ’significant impact’ on sales, the NAR’s Mr Yun said.