(NEW YORK) Home resales in the US rose in June for a third consecutive month, spurred by tax incentives, lower borrowing costs and foreclosure-driven declines in prices.
Purchases climbed 3.6 per cent to an annual rate of 4.89 million, stronger than forecast and the highest level since October, the National Association of Realtors (NAR) said yesterday in Washington. Median prices fell 15 per cent.
The gain in sales confirms Federal Reserve chairman Ben Bernanke's remarks this week that the worst housing slump in eight decades appears to be moderating. A record drop in household wealth, due in part to the plunge in property values, and mounting unemployment are among the reasons that rebounds in housing and the economy are likely to be drawn out.
'We have finally bottomed out,' said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh. Improved affordability 'is stalemating the drag from higher unemployment'. Mr Hoffman forecast sales would rise to a 4.9 million pace.
Economists forecast existing sales would rise to a 4.84 million rate from a previously reported 4.77 million for May, according to the median of 68 projections in a Bloomberg News survey. Estimates ranged from 4.7 million to 5 million.
The Labor Department earlier reported that first-time applications for jobless benefits climbed by 30,000 to 554,000 in the week ended July 18. The number of workers filing claims had dropped by 93,000 over the previous two weeks, reflecting changes in the timing of mid-year auto shutdowns to retool for the new-model year.
Stocks gained and Treasury securities fell after the report. The Standard & Poor's 500 index rose 1.4 per cent to 967.67 at 10.21am in New York.
June traditionally is one of the top sales months of the year as families prepare to move before the start of the next school term, according to the NAR. The group adjusts the figures for these seasonal variations in order to facilitate month-to-month comparisons. -- Bloomberg
Source: Business Times, 24 July 2009