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May 22, 2013 4:18 pm
US sales of previously-owned homes rose to a three-and-a-half-year high in April in another sign of gathering momentum in the country’s housing market recovery.
Existing home sales rose 0.6 per cent to a seasonally adjusted annual rate of 4.97m, the most since November 2009, according to National Association of Realtors data released on Wednesday. Economists surveyed by Bloomberg had expected slightly higher sales of 5m.
Borrowing costs at record lows, an improving jobs market and rising home prices have encouraged more Americans to buy houses even as inventories remain at low levels and tight credit standards are still holding back many buyers.
“Without these frictions, existing-home sales easily would be well above the 5m unit pace,” said Lawrence Yun, NAR chief economist.
“Buyer traffic is 31 per cent stronger than a year ago, but sales are running only about 10 per cent higher. It’s become quite clear that the only way to tame price growth to a manageable, healthy pace is higher levels of new home construction,” he added.
The number of properties on the market climbed by 11.9 per cent to 2.16m in April as more sellers were lured to the market by rising home prices. But this is still 14 per cent lower than the same month last year. At the current sales pace, it would take 5.2 months to sell those houses compared with 4.7 months at the end of March.
Lower inventories have supported prices. Median prices hit $192,800 in April, the highest since 2008, up 11 per cent from the same period in the prior year.
“Underlying buying trends remain broadly positive, with distressed sales as a percentage of total purchases falling,” said Gennadiy Goldberg, US Strategist at TD Securities.
Foreclosures and other distressed sales accounted for 18 per cent of the total, the lowest share in data going back to October 2008.
Existing home sales are recovering after reaching a 13-year low of 4.11m in 2008 from a peak of 7.08m in 2005. Resales accounted for about 93 per cent of the residential market in 2012.
The improved demand has fostered growth in renovations, spurring sales at home improvement retailers.
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