Nov. 19, 2012 at 10:03 AM ET
U.S. home resales unexpectedly rose in October, a sign that slow improvements in the country's labor market are helping the housing sector recovery gain traction.
That, in turn, is feeding hopes among construction companies, whose sentiment rose for a seventh straight month in November to its highest level in six years.
The National Association of Realtors said on Monday that existing home sales climbed 2.1 percent last month to a seasonally adjusted annual rate of 4.79 million units.
That was above the median forecast of a 4.75 million-unit rate in a Reuters poll.
NAR economist Lawrence Yun said superstorm Sandy, which slammed in the U.S. East Coast on Oct. 29, had only a slight impact on home resales. The only region where the pace of sales slipped was the Northeast. But Yun said the storm could temporarily hold back the pace of sales in November and December.
Nationwide, the median price for a home resale was $178,600 in October, up 11.1 percent from a year earlier as fewer people sold their homes under distressed conditions compared to the same period in 2011. Distressed sales include foreclosures.
The nation's inventory of existing homes for sale fell 1.4 percent during the month to 2.14 million, the lowest level since December 2002.
At the current pace of sales, inventories would be exhausted in 5.4 months, the lowest rate since February 2006.
The price increase last month was measured against October 2011, and since then distressed sales have fallen to 24 percent of total sales from 28 percent.
The share of distressed sales, which also include those where the sales price was below the amount owed on the home, was flat from September.
Meanwhile, the NAHB/Wells Fargo Housing Market index rose to 46 from 41 the month before, the group said in a statement. Economists polled by Reuters had predicted the index would remain unchanged at 41. The index was at its highest level since May 2006.
However, the gauge remained below 50, showing that the housing market was still some way off full recovery. Readings below 50 mean more builders view market conditions as poor than favorable. The index has not been above 50 since April 2006.
Still, the measure has made strong progress over the last year, helping to cement optimism in the sector. In November last year it stood at just 19. Housing led the financial crisis of 2008-09 and has been one of the biggest overhangs in the economic recovery.
"Builders are reporting increasing demand for new homes as inventories of foreclosed and distressed properties begin to shrink in markets across the country," said NAHB Chairman Barry Rutenberg in a statement.
Reuters contributed to this report.