Sales of previously owned U.S. homes climbed more than forecast in May to the highest level since November 2009 and prices jumped, indicating more progress for residential real estate.
Purchases of existing houses increased 4.2% to an annualized rate of 5.18 million from 4.97 million in April, the National Association of Realtors figures showed today in Washington. The median forecast in a Bloomberg survey called for a 5 million rate of sales. The median selling price surged from a year ago by the most since October 2005, the group said.
Rising home values and mortgage rates within a percentage point of all-time lows will help encourage Americans to put their properties on the market and trade up. The increase in wealth from housing is also bolstering confidence and sustaining consumer spending that will keep fueling the economy.
“We’re seeing resilience in home sales and continued recovery in the housing market,” Scott Anderson, chief economist at Bank of the West in San Francisco, said before the report. “As home values increase, more homeowners are in a positive equity situation, and that gives them more confidence to go out there and spend and borrow money. There’s a positive feedback loop.”
Stocks maintained losses after the Federal Reserve said yesterday that it may start paring record monetary stimulus. The Standard & Poor’s 500 Index dropped 1.2% to 1,609.95 at 10:10 a.m. in New York.
The median forecast in the Bloomberg survey of 74 economists ranged from 4.9 million to 5.18 million.
Purchases rose in all four regions, led by an 8% in Midwest and a 4% gain in the South.
The median price of an existing home increased 15.4% from a year earlier to $208,000 last month, the highest since July 2008. The monthly gain was the biggest since October 2005, when the median surged a record 16.6%.
Today’s report also showed that foreclosures and other distressed sales accounted for 18% of the total, matching the lowest since October 2008. First-time buyers accounted for 28% of purchases last month. They typically represent 40% to 45% of the market, according to the Realtors group.
Investors made up 18%, while all-cash transactions were 33%.