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Rise in pending home sales signals sustained US housing recovery

By Religare
|

A larger number of Americans signed contracts to purchase previously owned homes last month, signaling a pickup in the US housing recovery, lifting the outlook for the world's biggest economy.

The gauge measuring pending home sales rose 6.7 per cent to the highest level since December 2006 at 112.3 in May 2013, the National Association of Realtors said in a report on Thursday.

A pickup in existing home sales may also boost home furnishing purchases, accelerating US economic growth.

 

More number of Americans jumped into the market last month before mortgage rates climb further.

"Even with limited choices it appears some of the rise in contract signings could be from buyers wanting to take advantage of current affordability conditions before mortgage interest rates move higher," the National Association of Realtors said.

The average rate on a 30-year mortgage rose to the highest level since July 2011 to 4.46 per cent this week.

However, steady progress in job growth, rising incomes may bolster housing recovery in the coming months, overcoming the effect of rising mortgage rates.

The economy added 175,000 jobs in May, up from 149,000 in April while personal incomes climbed 0.5 per cent last month, improving personal finances, leaving more room for spending on big-ticket items such as property.

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Story first published: Friday, June 28, 2013, 22:53 [IST]
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