Existing home sales rose in May
usatoday.com
WASHINGTON - U.S. sales of previously-owned homes rose to near a record pace in May and the recent decline in mortgage rates is expected to help keep housing bustling through year's end.
Existing home sales increased 1.0% to a 4.82 million-unit annual rate last month, according to the National Association of Realtors. Economists surveyed by Bloomberg expected sales to rise 0.2% to a 4.78 million rate.
In April, resales fell a revised 2.5% to an annual rate of 4.77 million, the same as originally reported. Sales rose to a record 4.89 million-unit pace in March.
The housing market is resilient given the backdrop of a 28-year low unemployment rate, strong income growth, high consumer confidence and favorable interest rates. ''It's hot,'' said Daryl Jesperson, president of Re/Max International in Greenwood Village, Colo.
''From the reports we're getting from our offices across the country, it's typical to see sales 15% to 20% ahead of last year,'' Jesperson said. ''And last year was the best year in the history of real estate.'' Sales statistics for the first four months of the year averaged an annual rate of 4.70 million units, up 15% from the 4.08 million-unit average rate for the first four months of last year.
Regions mixed
Resales showed increases in two regions in May, fell in one and were unchanged in one. In the West, existing home sales rose 5.8% to a 1.09 million-unit level, while resales fell 2.5% to a 1.18 million-unit pace in the Midwest. Sales of previously owned homes rose 1.7% in the South to a 1.84 million-unit rate and in the Northeast, resales were unchanged at a 710,000-unit pace.
The number of homes available for sale rose to 2.43 million in May, representing a 6.0-month supply. In April, the number of homes available was 2.27 million, or a 5.7-month supply. The average price of an existing home rose in May to $162,400 from April's $159,700.
The outlook for housing remains bright. U.S. mortgage applications increased last week to the highest level in more than two months as mortgage rates stayed below 7%, the Mortgage Bankers Association of America said Wednesday.
The MBA's mortgage applications index jumped 9.8% to 440.6 in the week ended June 19 - the fourth consecutive weekly increase - from 401.1 the previous week. Last week's index was the highest since the week ended April 10, when it stood at 492.2.
The MBA reported that the average contract rate on a 30-year fixed-rate mortgage with a 20% down payment rose 7 basis points to 6.95% last week. The average rate on a one-year adjustable mortgage, pegged to the one-year constant maturity Treasury index, fell 10 basis points to 5.89%.
New class of buyers
The real estate market is luring ''a whole new class of first-time buyers,'' Jesperson said. Builders are attracting buyers with creative mortgage payments, he said. For instance, builders typically pay closing costs on a new home and then require a small down payment, he said.
That's bringing home ownership to a greater proportion of the population. Increased disposable income is rising, too, and creating more home-buying opportunities, Jesperson said. Several years ago, in a two-income household, the secondary income was 40% to 60% of the primary income, he said. Now, the secondary income is about 80% of the primary wage earner's income in a two-income household, he said.
Increased disposable income is affording consumers the opportunity to fill their homes with new furniture and appliances.
At Rowe Furniture, a leading manufacturer of medium-priced quality upholstered and wood furniture, reported on Tuesday sharply higher operating results for the second quarter.
McLean, Va.-based Rowe said it continues to experience strong sales growth, with incoming orders to date for upholstery running about 25% ahead of year-ago levels.
Pulaski Furniture reported last month that sales for the three months ended April 19 increased 11%, while net income rose 36%. The Pulaski, Va.-based company said it continues to benefit from the strong retail sales of furniture nationwide. It also reported that incoming orders were strong and backlogs increasing
By Bloomberg News
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