WASHINGTON (BLOOMBERG) - Sales of previously owned U.S. homes climbed to an eight-year high in June as momentum in the residential real estate market accelerated.
Closings on existing homes, which usually occur a month or two after a contract is signed, climbed 3.2 per cent to a 5.49 million annualised rate, the most since February 2007, the National Association of Realtors said Wednesday.
Prices rose to a record amid tight supply.
The housing market has picked up in recent months as more jobs, historically low mortgage rates and greater household formation boosts demand. Faster wage growth will be needed to help housing continue its recovery and become a bigger contributor to growth this year.
"The housing market is on fire," said Thomas Costerg, a senior economist at Standard Chartered Bank in New York, who projected sales would rise to a 5.48 million pace. "The strength in housing could offset some of the weakness we are seeing elsewhere." Stocks trimmed earlier losses after the report.
The Standard & Poor's 500 Index declined 0.1 percent to 2,117.69 at 10:18 a.m. in New York, led by a slump in technology shares on disappointing results from Apple Inc., Microsoft Corp. and Yahoo! Inc. The S&P Supercomposite Homebuilding Sub Index rose 2.3 per cent.
The median forecast for the pace of existing-home sales in the Bloomberg survey of 76 economists projected a gain to a 5.4 million pace in June. Estimates ranged from 5.2 million to 5.52 million. The Realtors' group revised May's rate to 5.32 million from a previously reported 5.35 million. Compared with a year earlier, purchases increased 9.6 percent in June on an adjusted basis.
The median price of an existing home rose 6.5 percent from June 2014 to $236,400, the highest on record before adjusting for inflation.
The number of existing properties on the market rose to 2.3 million in June compared with 2.28 million at the end of May. At the current pace, it would take 5 months to sell those houses compared with 5.1 months at the end of May.
The median time a home was on the market was 34 days, the fewest in records going back four years.
"The market is tighter compared to last year," Lawrence Yun, NAR chief economist, said in a news conference Wednesday as the figures were released. "Home values are rising too fast and we need more supply to bring the price growth down, consistent with income growth."
The real-estate agents' groups projects sales will total 5.26 million this year, the most since 2007. Purchases of existing homes increased in all four regions, led by a 4.7 percent gain in the Midwest. Investors are leaving the market and the share of first- time buyers is holding around 30 per cent, which means transactions are being driven by existing homeowners looking to relocate, said Mr Yun.