US home sales jump to highest level since May 2010
Sales increase 7.8 percent
10:37 AM, Sep 19, 2012
10:37 AM, Sep 19, 2012
U.S. sales of previously occupied homes jumped in August to the highest level in more than two years, adding momentum to the housing recovery.
Sales rose 7.8 percent to a seasonally adjusted annual rate of 4.82 million, the National Association of Realtors said. That's the most since May 2010, when sales were fueled by a federal home-buying tax credit.
The figures were reported the same day the government said U.S. homebuilders broke ground on more new homes in August compared to July.
Still, the recovery is from a depressed level. Sales of previously occupied homes remain below the more than 5.5 million that economists consider consistent with a healthy market.
And the number of first-time homebuyers, who are critical to a housing rebound, slipped to 31 percent from 34 percent.
More Americans appear to be taking advantage of near-record low mortgage rates and prices that are, on average, much lower than they were six years ago.
Sales might be higher if more homes were available, the Realtors' group said. The limited supply is helping to lift prices. 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.
The broader economy may also benefit from recent and more sustainable gains in home prices. When that happens, Americans typically feel wealthier and spend more. Consumer spending drives 70 percent of the economic growth.
Wednesday's positive reports follow other signs that there is a sustained recovery in housing under way. Home prices are rising steadily nationwide. Sales of new homes are also picking up. And home builders are more confident and are breaking ground on more new homes.
The National Association of Home Builders/Wells Fargo builder sentiment index, released Tuesday, rose to the highest level in more than six years in September. Customer traffic and sales are at their highest levels since 2006, the peak of the housing bubble.
Even with the gains in home sales, the market remains weak. Many would-be buyers are having difficulty qualifying for loans or can't afford the larger down payments being required by banks.
The Federal Reserve last week moved to push mortgage rates even lower. Fed Chairman Ben Bernanke said the bank would purchase $40 billion of mortgage-backed securities each month until the job market improves "substantially." That could push down longer-term interest rates and spur more borrowing and spending.
The Fed also hopes that lower mortgage rates will accelerate the housing market recovery and boost home prices. That, in turn, could make people feel wealthier and more willing to spend, which would bolster economic growth.