U.S. home resales rose in October to their highest level in more than 9-1/2 years amid pent-up demand, offering more evidence of a pickup in economic growth in the fourth quarter, but a recent surge in mortgage rates could slow housing market activity.
Continue Reading Below
The National Association of Realtors said on Tuesday existing home sales increased 2.0 percent to an annual rate of 5.6 million units last month, the highest level since February 2007. September's sales pace was revised up to 5.49 million units from the previously reported 5.47 million units.
Economists polled by Reuters had forecast sales slipping 0.5 percent to a 5.43 million-unit pace in October. Sales were up 5.9 percent from a year ago.
The report came on the heels of data last week showing a surge in housing starts. It also added to strong reports on retail sales and the labor market as well as manufacturing surveys in suggesting that the economy continued to gain speed early in the fourth quarter.
Despite last month's surprise rise, existing home sales remain constrained by a persistent shortage of properties available for sale. Sales could slow marginally early next year following a run-up in mortgage rates in the wake of this month's election of Republican candidate Donald Trump as the next president.
Trump's surprise victory has led to a surge in U.S. government bond yields amid investor concerns that the business mogul's expansionary fiscal policy agenda could fan inflation.
Mortgage rates closely track movements in U.S. Treasury yields. Since the Nov. 8 presidential election, the fixed 30-year mortgage rate has increased nearly 40 basis points to average 3.94 percent, according to data from mortgage finance firm Freddie Mac.