Daily Updates

August 23, 2013

U.S. home sales hit 5.4M in July, highest since ’09

WASHINGTON — For the first time since 2009, previously occupied U.S. homes are selling at a pace associated with a healthy market.

Sales jumped 6.5 percent in July to a seasonally adjusted annual rate of 5.4 million, the National Association of Realtors said Wednesday. Over the past 12 months, sales have surged 17.2 percent. The trend shows that housing remains a driving force for the economy even as mortgage rates have risen from record lows.

Buyers have been purchasing previously occupied homes at an annual pace above 5 million for three straight months. The last time that happened was in 2007. Sales are far above the 3.45 million pace of July 2010, the low point after the housing bubble burst. Analysts generally think a healthy sales pace is roughly between 5 and 5.5 million.

Buyers last month weren’t dissuaded by higher long-term mortgage rates, which have jumped, on average, a full percentage point since early May. The higher rates might have led some potential buyers to buy in July out of fear that rates will rise further.

July’s report captures completed sales, which typically reflect mortgage rates that were locked in a month or two earlier. A fuller effect of higher mortgage rates might not be clear until August home sales are reported next month.

Sales could slow later this year, especially if the Federal Reserve scales back its bond purchases. The Fed’s bond purchases have kept long-term interest rates, including mortgage rates, historically low.

For now, the average rate on the 30-year fixed mortgage remains low by historical standards. It was 4.4 percent last week.

“The one-percentage-point jump in mortgage rates in the past year doesn’t seem to have slowed home sales,” said Sal Guatieri, senior economist at BMO Capital Markets. “The jump in rates might have pulled forward some purchases, so a few more months of data are likely needed to wave the all-clear flag.”  

Steady hiring and low mortgage rates have helped the housing market recover over the last year.  Banks have also begun easing tight credit standards, which have made it hard for many people to get mortgages.

The number of available homes is also rising slowly and should support more sales. The supply of unsold homes rose 5.6 percent in July to 2.28 million. That’s still 5 percent below last year’s figure. A limited supply has been pushed up prices nationwide.

There were other positive signals in Wednesday’s report. The proportion of distressed sales including foreclosures stayed at 15 percent, the lowest since the Realtors began tracking the figure in October 2008.

And investors made up just 16 percent of purchases, down from a recent peak of 22 percent in February. The smaller proportion of investors suggests the market is slowly returning to normal.

One troubling sign: First-time homebuyers aren’t returning to the market. They usually help drive rebounds in home sales. But they made up only 29 percent of sales in July, below the 40 percent level consistent with a healthy market.

A brighter housing market helps the broader economy. Rising home sales boosts spending at furniture and home supply stores and lifts realtors’ incomes.

Higher home values also make consumers feel wealthier, which lifts their confidence and encourages more spending. Consumer spending drives roughly 70 percent of economic activity.

Sales of new homes have also been surging. They rose in June at their fastest pace in five years, to a seasonally adjusted annual rate of 497,000. Though new-home sales remain below the 700,000 pace consistent with healthy markets, they’ve risen 38 percent in the past 12 months.

On Wednesday, Toll Brothers Inc., the luxury homebuilder, issued an upbeat outlook. The company said its signed contracts in the quarter that just ended climbed 47 percent, and the average price of homes it delivered rose 13 percent.

Stocks of Toll and other builders have generally fallen since early spring on fears that higher mortgage rates will cool home purchases later this year.

 

1
Text Only
Daily Updates
  • 10 Things to Know for Monday

    Your daily look at late-breaking news, upcoming events and the stories that will be talked about Monday:

    April 20, 2014

  • In Other News, April 20

    April 20, 2014

  • Ukraine, Russia trade blame for shootout in east

    Within hours of an Easter morning shootout at a checkpoint manned by pro-Russia insurgents in eastern Ukraine, Russia’s Foreign Ministry issued a statement blaming militant Ukrainian nationalists and Russian state television stations aired pictures of supposed proof of their involvement in the attack that left at least three people dead.

    April 20, 2014

  • In West Bank, teen offenders face different fates

    The boys were both 15, with the crackly voices and awkward peach fuzz of adolescence. They lived just a few minutes away from one another in the West Bank. And both were accused of throwing stones at vehicles, one day after the other.

    April 20, 2014

  • Study: Fuels from corn waste not better than gas

    Biofuels made from the leftovers of harvested corn plants are worse than gasoline for global warming in the short term, a study shows, challenging the Obama administration’s conclusions that they are a much cleaner oil alternative and will help combat climate change.

    April 20, 2014

  • Fracking foes cringe as unions back drilling boom

    After early complaints that out-of-state firms got the most jobs, some local construction trade workers and union members in Pennsylvania, Ohio and West Virginia say they’re now benefiting in a big way from the Marcellus and Utica Shale oil and gas boom.

    April 20, 2014

  • In Colorado, a pot holiday tries to go mainstream

    Once the province of activists and stoners, the traditional pot holiday of April 20 has gone mainstream in the first state in the nation to legalize recreational marijuana.

    April 20, 2014

  • ‘Capt. America’ tops box office for third week

    Captain America continues to vanquish box office foes, triumphing in ticket sales for the third consecutive week and dominating over megastar Johnny Depp’s new movie.

    April 20, 2014

  • Probe could complicate Rick Perry’s prospects

    Texas Gov. Rick Perry has spent a record 14 years in office vanquishing nearly all who dared confront him: political rivals, moms against mandatory vaccines for sixth graders, a coyote in the wrong place at the wrong time.

    April 20, 2014

  • NASA’s space station Robonaut finally getting legs

    Robonaut, the first out-of-this-world humanoid, is finally getting its space legs.

    April 19, 2014