Sales of new US homes likely increased 0.5 percent in June

Markets Associated Press

The Commerce Department reports on sales of new homes in June at 10 a.m. Eastern Friday.

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HIGHER SALES: Economists expect a 0.5 percent increase in new-home sales to a seasonally adjusted annual rate of 548,000, according to a survey by data the firm FactSet.

The housing market has revived in recent months as sales have climbed dramatically. Aided by a nearly two-year hiring streak and low mortgage rates, sales of new homes have vaulted up 24 percent through the first five months of the year. Purchases of new homes climbed in May to an annual rate of 546,000, the strongest pace since February 2008, when the U.S. housing bubble burst.

SOLID DEMAND: As the U.S. economy enters its seventh year in recovery, more Americans are showing an appetite for the asset — housing — that initially triggered the recession. But supplies remain remarkably tight with few new listings coming onto the market and construction increasing at a slower pace than sales of new homes, a possible sign that the current strength in the market could wane as would-be buyers become frustrated by their limited options.

Construction of single-family houses has risen 9.1 percent year to date, less than half the pace of sales growth for new homes.

Sales of existing homes increased 3.2 percent in June to a seasonally adjusted annual rate of 5.49 million, the National Association of Realtors said Wednesday. The shortage of new listings has fueled higher prices. The median home value has risen 6.5 percent over the past year to $236,400, the highest figure — not adjusted for inflation — documented by the Realtors.

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Much of the additional demand has emerged for a healthier jobs market and low mortgage rates. Employers added 3.1 million jobs last year and are on pace to add 2.5 million jobs this year.

Borrowing costs are rising but have stayed low by historical standards.

The average 30-year fixed rate was 4.04 percent last week, according to the mortgage giant Freddie Mac. That average has increased from a 52-week low of 3.59 percent.