U.S. existing home sales rise, fueling recovery hopes

U.S. existing home sales notched their third monthly rise in June and prices hit the highest level since October, fueling hopes that the housing sector is finally on the mend and will help propel a broader economic recovery.

The National Association of Realtors (NAR) said sales of existing homes in June rose 3.6 percent to an annual rate of 4.89 million units, compared with a downwardly revised 4.72 million pace in May.

The June reading was the fastest sales pace since October, and topped forecasts for a 4.84 million unit annual pace.

"This is a very good report, as it suggests that the recent momentum in U.S. housing activity may be gathering some traction as U.S. homebuyers take advantage of the very favorable mortgage rates and home prices," said Millan Mulraine, economics strategist at TD Securities in Toronto.

The NAR said it was the first time the industry had experienced three straight months of gains in existing home sales since early 2004.

"Overall, the news is positive. We have increasing home sales for the third straight month, declining inventory and although prices fell, they declined at a less steep pace," NAR chief economist Lawrence Yun told a press conference. "The housing market is healing after four years of recession."

INVENTORIES DOWN

The inventory of existing homes for sale declined 0.7 percent to 3.82 million in June. The median national home price came in at $181,800, down 15.4 percent from the same period a year ago. But the median price was up 4.0 percent compared with May and was at the highest level since October.

"The months supply of home for resale is coming down and home prices are falling at a slower pace overall, providing more evidence that the housing market is stabilizing," said Torsten Slok, a senior economist at Deutsche Bank in New York.

NAR's Yun said that the inventory of previously owned homes for sale represented 9.4 months' supply at the current pace of sales, down from 9.8 months' in May.