Breaking News
0

U.S. existing home sales at one-year high, prices up

Economic IndicatorsOct 21, 2014 01:39PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters A real estate sign advertising a home for sale is pictured in Vienna, Virginia 2/2

By Lucia Mutikani

WASHINGTON (Reuters) - U.S. home resales raced to a one-year high in September, the latest indication the housing market recovery is gradually getting back on track.

A separate report on Tuesday showed service sector activity in the nation's mid-Atlantic region picked up speed this month, another signal suggesting underlying strength in the economy.

The National Association of Realtors said existing home sales increased 2.4 percent to an annual rate of 5.17 million units, the strongest reading since September of last year.

That was above economists' expectations for a rise to a 5.10 million unit pace and more than reversed August's decline, which had pushed down sales to a 5.05 million unit pace. Still, sales were 1.7 percent below those for September of last year.

"The housing recovery continues to move along sluggishly, as consumers are stuck between tight credit standards and limited wage growth," said Sophia Kearney-Lederman, an economist at FTN Financial in New York.

Housing is slowly regaining its footing after activity stalled in the second half of 2013 following a run-up in mortgage rates. While it continues to be hobbled by sluggish wage growth, a recent decline in mortgage rates should help support sales.

The 30-year mortgage rate fell to an average of 3.97 percent last week from 4.12 percent in the week ended Oct. 9, according to data from mortgage finance firm Freddie Mac. The decline reflected a sharp drop in U.S. Treasury debt yields as traders pushed back expectations for the first interest rate hike by the Federal Reserve against a backdrop of troubling economic news from overseas and a big sell-off in global stock markets.

FIRST-TIME BUYERS SIDELINED

The housing data helped U.S. stocks to extend gains. The housing sector index (HGX) rose 1.3 percent, with shares of homebuilder Pulte Group (N:PHM) gaining 2.18 percent and those of KB Home (N:KBH) increasing 2.45 percent.

Prices for U.S. Treasury debt fell, while the dollar rose against a basket of currencies.

In a separate report, the Philadelphia Federal Reserve Bank said its gauge of non-manufacturing activity in the mid-Atlantic region rose to 44.1 in October from 35.7 in September.

Measures of new orders and sales both increased, but a reading on service sector jobs slipped, suggesting a slower pace of improvement in the labor market.

While home sales picked up last month, first-time buyers, a critical component for a sustainable recovery, remained on the sidelines. They accounted for 29 percent of sales for a third straight month, below the 40 percent to 45 percent that is considered ideal by economists and real estate agents.

"We need to see more first-time buyers both willing and able to buy, without the support of excessively easy credit, if we really want to see a healthier and more sustained recovery in housing," said Diane Swonk, chief economist at Mesirow Financial in Chicago.

Investors, who had supported the market, have been withdrawing. They accounted for only 14 percent of transactions last month, down from 19 percent in September of last year.

The inventory of unsold homes on the market increased 6 percent from a year ago to 2.30 million. At September's sales pace, it would take 5.3 months to clear houses from the market, down from 5.5. months in August. A six months' supply is viewed as a healthy balance between supply and demand.

With supply improving, house price gains continue to moderate. The median home price rose 5.6 percent in September from a year ago, but that was down from the double-digit growth seen for much of 2013.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

U.S. existing home sales at one-year high, prices up
 

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email