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US existing-home sales rise for first time in seven months

Washington

SALES of previously owned US homes rose in October for the first time in seven months, suggesting that demand is stabilising at a lower level as available properties become less scarce.

Contract closings increased from the prior month to an annual rate of 5.22 million, the National Association of Realtors (NAR) said on Wednesday.

That compared with economists' projections for sales of 5.2 million. The median sales price rose 3.8 per cent from a year earlier, while the inventory of available homes expanded 2.8 per cent, the third straight increase.

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Even with the monthly increase, the market remains relatively soft, as sales were down 5.1 per cent from a year earlier, the biggest drop since 2014.

Housing has been buffeted by the highest mortgage rates in eight years and rising property prices that continue to outpace wages. Residential investment accounts for about 3.9 per cent of the economy.

Two other housing reports this week gave a mixed picture of the sector: sentiment among homebuilders dropped the most since 2014 in November amid pessimism over both current and future demand, while government data showed housing starts rebounding slightly in October.

Even with the slowdown in the housing market, US Federal Reserve officials are still projected to raise interest rates in December for the fourth time this year and continue tightening in 2019, as consumer spending is seen remaining solid.

NAR chief economist Lawrence Yun urged the Fed to consider pausing its interest rate hikes amid other indicators such as soft inflation.

"Demand is being choked off" by higher borrowing costs, he said at a briefing in Washington accompanying the report.

Home purchases rose in three of four regions: the North-east, South and West recorded increases, while sales declined in the Mid-west.

Sales declined from a year earlier in the largest price category, the US$100,000 to US$250,000 range, as well as below US$100,000; they rose at prices above US$250,000.

The monthly increase was more pronounced in condominium and co-op units, which were up 5.3 per cent to 600,000. Sales of single-family homes rose 0.9 per cent.

At the current pace, it would take 4.3 months to sell all homes on the market, compared with 4.4 months in September, below the five-months' supply mark that realtors consider consistent with a tight market.

Existing-home sales account for about 90 per cent of the market and are calculated when a contract closes.

The remainder of the market is made up by new home sales, which are a timelier indicator as they are tabulated when contracts get signed. BLOOMBERG