Aug. 22, 2012 at 9:57 AM ET
More Americans purchased previously-owned homes in July, suggesting improvement in the beleaguered housing market over the summer.
Existing home sales rose 2.3 percent last month, with sales rising to a seasonally adjusted annual rate of to 4.47 million units, up from 4.37 million units in June, the National Association of Realtors said Wednesday. That was just below analysts' expectations of a 4.52 million-unit rate. Sales were 10.4 percent above the 4.05 million-unit pace in July 2011.
Low interest rates and a modest improvement in the labor market helped home buying conditions, the NAR said.
“Mortgage interest rates have been at record lows this year,” said the NAR’s chief economist Lawrence Yun, adding that the labor market was also showing signs of improvement.
“Combined, these factors are helping to unleash pent up demand,” he said. “However, the market is constrained by unnecessarily tight lending standards and shrinking inventory supplies, so housing could easily be much stronger without these abnormal frictions.”
The NAR said it is asking the government to expeditiously release the foreclosed properties it owns in inventory-constrained markets.
Nationwide, the median price for a home resale was $187,300 in July, 9.4 percent higher than in the same month a year earlier.
In June, sales declined 5.4 percent to a seasonally adjusted annual rate of 4.37 million.
Wednesday’s housing number could be a sign of strength for the housing market, which is beginning to recover from the after-effects of the financial crisis.
Recent data suggest that the housing market, which has suffered over the past six years, is perking up, with sales and prices becoming stable.
But home building now plays a much smaller economic role than it did before the 2007-2009 recession, and a turn for the worse in the broader economy could easily undo housing's incipient recovery.
“We think the housing sector has turned a corner and demand will continue to improve,” said Michelle Girard, a senior economist at Royal Bank of Scotland in Stamford, Ct.
“The data also underscores the fact that improvement will be gradual. What would help the housing sector would be a stronger economy, better job growth, and easier financing conditions. I still think it's difficult to get a mortgage loan, that's hindering activity.”
A separate report Wednesday showed applications for U.S. home mortgages tumbled last week, with demand for refinancing drying up as mortgage rates jumped to their highest level since late June.
Reuters contributed to this report.