LITTLE ROCK — Sales of previously owned homes rose to a seasonally adjusted annual rate of 4.47 million in July, a 2.3 percent increase from the previous month’s rate, the National Association of Realtors said Wednesday.
Analysts say the report is more evidence that the housing market is slowly, but steadily, improving.
The industry’s recovery has grown more consistent, though it remains sluggish and uneven. July sales were below the 4.6 million annual pace reached in April and May. And the annual sales pace is below the roughly 5.5 million that economists consider healthy.
Still, sales have increased 10.4 percent compared with a year ago.
The sales increase last month was broad-based. Purchases rose for single-family homes and condominiums. And sales rose in three of four U.S. regions. They were flat in the West.
“Rising single-family home sales indicate that households are feeling increasingly confident taking on larger purchases as their [finances] improve,” Joseph LaVorgna, chief U.S. economist at Deutsche Bank, wrote in a note to clients.
The sales gains are being driven in part by higher priced houses. Luxury-home builder Toll Brothers said Wednesday that its net income jumped 46 percent in the May-July quarter.
“We are enjoying the most sustained demand we’ve experienced in over five years,” Chief Executive Officer Douglas Yearley said.
The Realtors’ report said the median home price dipped in July from June to $187,300. Still, that’s up 9.4percent from a year ago. It’s the fifth-straight month in which the median price, as measured year over year, has risen.
A big reason for the price increase is that sales for pricier homes have picked up, while sales of homes below $100,000 have fallen, the Realtors’ group said.
The number of first-time homebuyers, critical to a housing rebound, rose to 34 percent of sales, up slightly from June. In a healthy market, first-time buyers make up about 40 percent of sales.
Purchases are being restrained by low levels of homes available for sale and by tight credit standards, the Realtors’ group said.
Other recent reports add to the picture of an improving housing market, though one that’s recovering at a painfully slow and uneven pace.
Home prices are rising nationwide. They increased 2.2 percent from April to May, according to one leading index. That was the second-straight increase after seven months of flat or declining prices.
The median U.S. home price rose 9.4 percent in July compared with a year earlier to $187,300, the Realtors’ group said. That was the biggest annual gain in 6 1/2 years. One reason for the increase is that foreclosed homes, which usually sell at steep discounts, are making up a smaller proportion of sales than theydid a year ago.
Builders, meanwhile, are growing more confident because they’re seeing more traffic from potential buyers. An index of builder confidence rose to its highest level in five years in August.
Builders responded by applying for the largest number of building permits in nearly four years last month. They broke ground on slightly fewer new homes in July than in June. But that was after the number of housing starts had reached a 3 1/2-year high in June.
In July, the number of unsold homes ticked up to 2.4 million. It would take about 6.4 months to exhaust thatsupply at the current sales pace. That’s just above the six months’ inventory that typically exists in a healthy economy.
“The healing in housing continues,” said Brian Jones, a senior U.S. economist at Societe Generale in New York. “We’re clearly in an upturn for the sector.”
Even with near-record-low mortgage rates, many wouldbe buyers are having difficulty qualifying for loans or can’t afford the larger down payments being required by banks.
Hiring picked up a bit in July, which could support more home sales in the coming months. Job growth helps consumers feel more secure about their finances and typically encourages more of them to buy homes.
Employers added 163,000 jobs last month, the most since February. Job gains had averaged only 73,000 in the April-June quarter, raising fears that the economy was faltering and might even slip into recession.
Investors also are more upbeat. The Standard & Poor’s Supercomposite Homebuilding Index has advanced 55 percent so far this year, outpacing a 12 percent gain in the broader S&P 500.
Foreclosures are abating, though they still pose a threat as borrowers struggle to pay bills. The mortgage delinquency rate, or the share of home loans at least 30 days late, rose in the second quarter from the previous three months, the first gain in a year, according to data from the Mortgage Bankers Association.
Information for this article was contributed by and Shobhana Chandra and Chris Middleton of Bloomberg News.
Business, Pages 25 on 08/23/2012