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US existing-home sales increase to highest in more than a year
[WASHINGTON] Sales of previously owned US homes rose in August to the highest in more than a year amid lower borrowing costs and sustained income gains, adding to signs the housing market is breaking out of a slump.
Contract closings rose 1.3 per cent from the prior month to a 5.49 million annual rate, the fastest pace since March 2018, the National Association of Realtors said Thursday. That exceeded all forecasts in a Bloomberg survey of economists, whose median projection was 5.38 million. The median sales price rose 4.7 per cent from a year earlier - the second-fastest gain in the past year - to US$278,200.
The first back-to-back sales gain since 2017 suggests housing is on the rebound after residential investment dragged down economic growth for six straight quarters. Higher wages and lower mortgage rates are bolstering demand and affordability, though the supply of homes remains tight, pushing up prices faster than pay and inflation. At the same time, weakening business investment and slower hiring could limit any gains, as trade uncertainty weighs on the economy.
The Federal Reserve on Wednesday cut its benchmark rate by a quarter point for a second straight meeting to insure the US economy against risks from global weakness and trade tensions. That should help keep mortgage costs low and support demand for houses. Chairman Jerome Powell stressed that the US economic outlook is solid.
The data may also assuage concerns among some economy watchers that a recession is coming in the next year. A report Wednesday showed new home construction surged in August to the fastest pace of the expansion as homebuilders started more apartment projects and single-family houses. Permits, which are often viewed as a proxy for future construction, rose to a 12-year high.