WASHINGTON: United States home resales last month posted the largest monthly increase in at least 10 years as first-time buyers rushed to take advantage of a tax credit that expires this autumn.
The National Association of Realtors said on Thursday that home sales rose 7.2 per cent to a seasonally adjusted annual rate of 5.24 million last month, from a pace of 4.89 million in June.
It was the fourth-straight monthly increase and the highest level of sales since August 2007. Sales had been expected to rise to an annual pace of 5 million, according to economists surveyed by Thomson Reuters.
The median sales price was US$178,400 (S$256,600), down 15 per cent from US$210,100 in the same month last year.
'The housing market, with today's strong rise in sales, has decisively turned for the better,' said Mr Lawrence Yun, the trade group's chief economist.
'The housing market is starting to find its footing,' said Mr Nathaniel Paull, who helps manage about US$3 billion at New Amsterdam Partners in New York. 'Even if it just flattens out, it's a positive for economic growth.'
The inventory of unsold homes on the market rose to 4.1 million, from 3.8 million a month earlier. That is a 9.4-month supply at the current sales pace, unchanged from a month earlier.
Sales of foreclosures and other distressed properties made up about a third of all transactions last month, down from nearly half earlier this year.
In places like San Diego and Orlando, buyers are snapping up foreclosed properties at deep discounts and real estate agents are pressing banks to release more foreclosures onto the market.
First-time buyers will need to sign a contract on a home by mid-October if they want to qualify for a tax credit that allows them to save up to US$8,000 on the purchase.
Sales need to be completed by the end of November, but real estate agents and homebuyers are lobbying Congress to get that credit extended. 'It would be unfortunate to see the momentum halted,' Mr Yun said.
'The housing market remains on the road to recovery due to good affordability,' Mr Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, said before the report. Even so, 'it's probably relegated to the slow lane until joblessness and credit standards ease'.
Major stock indicators, which had risen moderately, surged more than 1 per cent after the positive news on home sales as well as Federal Reserve chairman Ben Bernanke's comments that the US economy appeared to be on the mend, albeit sluggishly.
The Dow Jones Industrial Average was 137.92 points or 1.48 per cent higher at 9,487.97.
ASSOCIATED PRESS, BLOOMBERG
Source: Straits Times, 22 Aug 2009