Low mortgage rates, higher incomes drive US pre-owned home sales to highest in more than a year
- Contract closings rose 1.3 per cent from the prior month to a 5.49 million annual rate, the fastest pace since March 2018
- The first back-to-back sales gain since 2017 suggests housing is on the rebound after residential investment dragged down economic growth for six straight quarters
Sales of previously owned US homes rose in August to the highest in more than a year amid lower borrowing costs and sustained income gains, adding to signs the housing market is breaking out of a slump.
Contract closings rose 1.3 per cent from the prior month to a 5.49 million annual rate, the fastest pace since March 2018, the National Association of Realtors said on Thursday. That exceeded all forecasts in a Bloomberg survey of economists, whose median projection was 5.38 million.
The median sales price rose 4.7 per cent from a year earlier – the second-fastest gain in the past year – to US$278,200.
The figures follow data out Wednesday showing solid housing construction and a Thursday report on jobless claims that indicated the nation’s labour market remains solid. The S&P 500 Index extended gains after the existing-home sales report and the Federal Reserve’s decision on Wednesday to reduce its key lending rate.
The first back-to-back sales gain since 2017 suggests housing is on the rebound after residential investment dragged down economic growth for six straight quarters. Higher wages and lower mortgage rates are bolstering demand and affordability, though the supply of homes remains tight, pushing up prices faster than pay and inflation.
At the same time, weakening business investment and slower hiring could limit any gains, as trade uncertainty weighs on the economy.