WASHINGTON – Home resales rose in October and a gauge of homebuilder sentiment climbed to a six-year high in November, a sign slow improvements in the labor market are helping the housing sector recovery gain traction.
The National Association of Realtors said on Monday that existing home sales climbed 2.1 percent last month to a seasonally adjusted annual rate of 4.79 million units, beating forecasts by Wall Street economists.
The data suggests America's recovery from the 2007-09 recession in becoming increasingly self-sustaining, with job creation helping drive home sales, which in turn are supporting economic growth.
"The housing market is continuing to improve. It's probably improving more than most economists were projecting earlier this year," said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts.
However, the data also showed that superstorm Sandy, a mammoth storm that slammed in the U.S. East Coast on October 29, continues to distort economic data in the United States.
The deadly storm had only a slight impact on home resales last month, with sales dropping in the Northeast. But NAR economist Lawrence Yun said the storm could temporarily hold back the pace of sales in November and December.
The storm, which killed more than 130 people in the United States and left millions of homes and businesses without electricity, also lead U.S. factories to cut production in October while consumers pulled back on automobile purchases. Economists, however, think Sandy's impact on the economy will only prove temporary.
The U.S. jobless rate fell four tenths of a point to 7.9 percent in the three months through October, although it remains elevated by historical standards. Many Wall Street economists think economic growth picked up sharply in the third quarter, although growth is expected to moderate in the last three months of the year as businesses and consumers hold back on purchases due to uncertainty over U.S. fiscal policy in 2013.
In October, the median price for a home resale was $178,600, up 11.1 percent from a year earlier as fewer people sold their homes under distressed conditions compared to the same period in 2011. Distressed sales include foreclosures.
The nation's inventory of existing homes for sale fell 1.4 percent during the month to 2.14 million, the lowest level since December 2002.
At the current pace of sales, inventories would be exhausted in 5.4 months, the lowest rate since February 2006.
The price increase last month was measured against October 2011, and since then distressed sales have fallen to 24 percent of total sales from 28 percent.
The share of distressed sales, which also include those where the sales price was below the amount owed on the home, was flat from September.
A separate report showed U.S. homebuilder sentiment rose for a seventh consecutive month in November, hitting its highest level in over six years as demand for new homes increased due to a shrinking supply of distressed and foreclosed inventory.
The National Association of Home Builders said the NAHB/Wells Fargo Housing Market index rose to 46 from 41 the month before. Economists polled by Reuters had predicted the index would remain unchanged. The index was at its highest level since May 2006.
However, the gauge remained below 50, showing that the housing market was still some way off full recovery. Readings below 50 mean more builders view market conditions as poor than favorable. The index has not been above 50 since April 2006.
The measure has made strong progress over the last year, helping to cement optimism in the sector. In November last year it stood at just 19. Housing led the financial crisis of 2008-09 and has been one of the biggest overhangs in the economic recovery.
"Builders are reporting increasing demand for new homes as inventories of foreclosed and distressed properties begin to shrink in markets across the country," said NAHB Chairman Barry Rutenberg in a statement.
(Additional reporting by Ed Krudy and Richard Leong in New York; Editing by Andrea Ricci)