US home resales rose to over 9-year high in May

United States home resales rose in May to a more than nine-year high amid low mortgage rates.
United States home resales rose in May to a more than nine-year high amid low mortgage rates.PHOTO: AFP

WASHINGTON (Reuters) - United States home resales rose in May to a more than nine-year high amid low mortgage rates, pointing to sustained housing market strength that should keep the economy on solid ground.

The fairly strong existing home sales report on Wednesday added to retail sales and international trade data in painting an upbeat picture of the economy in the second quarter.

A sharp slowdown in job growth in May had cast doubts on whether growth was picking up after almost stalling in the first quarter.

"The housing market recovery is truly back on track ..., which should reinforce confidence that the economic recovery is moving in the right direction," said Millan Mulraine, deputy chief economist at TD Securities in New York.

The National Association of Realtors said existing home sales gained 1.8 per cent to an annual rate of 5.53 million units last month, the highest level since February 2007.

Economists had forecast sales rising 1.1 per cent to a 5.54 million-unit pace in May.

April's sales pace was revised down to 5.43 million units from the previously reported 5.45 million units.

Sales were up 4.5 per cent from a year ago.

US financial markets were little moved by the report as investors nervously awaited the outcome of Britain's referendum on European Union membership on Thursday.

Despite rising for three straight months, existing home sales remain constrained by a shortage of homes available for sale. The dearth of properties is keeping home prices elevated, sidelining some first-time buyers.

The median house price soared 4.7 per cent from a year ago to a record US$239,700 (S$320,539)last month. The rate of increase has, however, slowed from last year's brisk pace.

Demand for housing is being driven by historically low mortgage rates, improving household formation as some young adults find employment and older Americans move into smaller and cheaper homes.