New house sales in the US jumped by 11 per cent in June, providing some of the strongest evidence yet that the market has bottomed out after being savaged for three years.
There are increasing signs that the combined impact of falling prices and low mortgage rates, along with aggressive government incentives, is driving people back to the market and stirring sales.
The monthly rise was the sharpest in nearly nine years, far exceeding economists’ expectations, and followed a revised increase of 2.4 per cent in the previous month. House sales rose to an adjusted annual rate of 384,000, the department of commerce said.
“[This is] more evidence that a bottom is forming in the housing market, with new home sales confirming the signal provided by other housing data,” said Alan Ruskin, a strategist at RBS Greenwich Capital.
Last week saw a rise in existing home sales and prices, while housing starts jumped by 3.6 per cent in June and housebuilder sentiment hit a 10-month high in July.
Economists at Goldman Sachs said: “At long last, the downturn in the US residential real estate market may be drawing to a close.”
Renewed interest in the US housing market follows months of pain, as rising unemployment has fuelled soaring rates of foreclosure and put severe pressure on prices. Economists have blamed this “negative feedback loop” for dragging the US economy into the worst recession of the past 50 years.
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