Sales of previously owned U.S. homes climbed in October, indicating gains in the real estate market are being sustained by cheap borrowing costs.
Purchases of existing houses, tabulated when a contract closes, increased 2.1 percent to a 4.79 million annual rate, exceeding the median forecast of economists surveyed by Bloomberg, figures from the National Association of Realtors showed today in Washington. The median price rose from a year ago as inventories dropped to the lowest level in almost a decade.
Propelled by the lowest mortgage rates on record, cheaper properties and improved consumer sentiment, housing is one of the economy’s sources of strength. The pace of October sales underscores what Federal Reserve Chairman Ben S. Bernanke called “signs of improvement” in a market still hampered by strict bank lending standards.
“There’s clear signs that people are moving back into the housing market,” Mike Englund, chief economist of Action Economics LLC in Boulder, Colorado, said before the report. “Every measure of that market shows we have very tight inventories and we have continued demand. That presumably should be creating some updraft for the existing-home market.”
Stocks extended gains after the figures, with the Standard & Poor’s 500 Index rising 1.5 percent to 1,380.4 at 10:03 a.m. in New York.
The median forecast of 77 economists surveyed by Bloomberg called for home sales at a 4.74 million rate. Estimates ranged from 4.5 million to 5.05 million. The prior month’s pace was revised to 4.69 million from a previously reported 4.75 million.
The median price of an existing home climbed 11.1 percent from October 2011 to $178,600, today’s report showed. The increase in October reflected a pickup in sales of more expensive properties.
The number of previously owned homes on the market decreased 1.4 percent to 2.14 million, the lowest since December 2002. At the current sales pace, it would take 5.4 months, the fewest since February 2006, to sell those houses compared with 5.6 months at the end of September.
Sales of existing single-family homes increased 1.9 percent to an annual rate of 4.22 million. Purchases of multifamily properties -- including condominiums -- rose to a 570,000 pace from 550,000.
Purchases climbed in three of the four regions, reflecting a 4.4 percent increase in the West, a 2.1 percent gain in the South and a 1.8 percent rise in the Midwest. Demand fell 1.7 percent in the Northeast, reflecting a slowdown in purchases due to superstorm Sandy.