Sales of previously owned U.S. homes climbed 4.2% in May to an annualized rate of 5.18 million, the highest level since November 2009, figures from the National Association of Realtors showed last week. The median selling price surged from a year ago by the most since October 2005, the group said.
Traction in the residential real estate recovery is supporting homebuilders’ positive outlook. The National Association of Home Builders/Wells Fargo index of builder sentiment rose eight points, the biggest monthly increase since September 2002, to 52 in June. Readings above 50 mean more respondents said conditions were good.
The sustained growth in demand is lifting companies such as lumber producer Weyerhaeuser Co. of Federal Way, Washington, and building confidence in the housing market’s return to pre- recession levels.
“We are, as we discussed in May, seeing a recovery in housing,” Chief Executive Officer Daniel Fulton said on a June 17 conference call. “We believe we are on our path to long-term recovery to trend levels.”
At the same time, borrowing costs are climbing from record lows. The average rate on a 30-year fixed mortgage was 3.93% in the week ended June 20, compared with an average 3.55% so far in 2013, according to data from Freddie Mac. The rate fell to 3.31% in November, the lowest in records dating to 1972.
Fed Chairman Ben S. Bernanke said at a news conference last week that the rise in mortgage rates hasn’t been “so dramatic” as he suggested the housing market may be strong enough to withstand higher borrowing costs.
At the same time, investors sold bonds that guide home-loan rates as Bernanke said he expects the Fed will slow its $85 billion in monthly asset purchases later this year and end the program around the middle of 2014.