US home resales rose in July, helped by low interest rates and increased hiring although the data still pointed to a slow recovery in housing that will provide only slight support for the economy. Sales of previously owned homes rose 2.3 percent to an annual rate of 4.47 million units, the National Association of Realtors said on Wednesday. T h e level of sales was just below analysts' expectations of a 4.52 million-unit rate.
The US housing market, in a deep rut since the 2007-09 recession, has been a relative bright spot in the economy this year. ---- Mortgage applications fall last week The NAR said home prices rose last month from a year earlier and that fewer homes were sold under distressed conditions - those following foreclosures or in short sales.
"The housing sector has turned a corner, and demand will continue to improve," said Michelle Girard, an economist at RBS in Stamford, Connecticut. Many economists think residential construction will give a small boost to the economy this year. But home building plays a much smaller economic role than it did before the recession, and a turn for the worse in the broader economy could easily undo housing's fledgling recovery. While interest rates are low, it is still hard for many people to get a mortgage.
The pace of sales has rebounded since bottoming out in 2010, but remains about 40 percent below its 2005 peak. Indeed, the current sales pace is roughly in line with levels seen in 1997. With stubbornly high unemployment and a weaker global economic picture, many economists think the Federal Reserve could launch a new round of bond buying to help prop up the economy as soon as next month.
The Fed is set to release minutes later on Wednesday from its last meeting held July 31-August 1, which could give clues about policymakers' readiness to act. Households are still heavily in debt, and many owea more on their homes than they are worth, making those properties harder to sell. The number of existing homes on the market has fallen sharply since last year, though inventory rose slightly in July to 2.4 million homes. That was 1.3 percent higher than in June but 23.8 percent below its year-ago level. At the current pace of sales, the inventory would last 6.4 months. Distressed sales - which are homes often sold at deep discounts - made up 24 percent of sales in July, down from 25 percent in June, the NAR said.
The median price for a home resale was $187,300 in July - 9.4 percent higher than in the same month a year earlier. Most economists expect US economic growth will pick up a bit in the second half of the year, barring potential problems from abroad like a worsening in Europe's debt crisis.
A separate report showed applications for US home mortgages tumbled last week, with demand for refinancing drying up as mortgage rates jumped to their highest level since late June. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 7.4 percent in the week ended August 17. Fixed 30-year mortgage rates jumped 10 basis points to average 3.86 percent. Even with the increase, rates are still at relatively cheap levels after falling to record lows in recent months.