Home sales hit an 11-month high last month and the number of properties on the market was the fewest in almost seven years, pointing to a nascent recovery in the housing sector.
The National Association of Realtors (NAR) said on Friday existing home sales increased 5 percent to an annual rate of 4.61 million units, with all four of the nation’s regions recording gains.
Sales of both multi-family and single-family homes rose.
“It seems that the housing sector may be slowly picking itself up off of the mat,” said Omair Sharif, an economist at RBS in Stamford, Connecticut.
The fairly upbeat data and reports that debt-stricken Greece was close to a deal with its private-sector creditors pushed US Treasury debt prices lower. Stocks on Wall Street were mixed, while the US dollar was little changed against a basket of currencies.
While the home sales pace was a touch below economists’ expectations, last month marked the third straight month of gains, adding to hopes that a tentative recovery was taking shape.
However, a glut of unsold properties that is weighing down on prices and stringent lending practices by banks is likely to make progress painfully slow.
There were 2.38 million unsold homes on the market last month, the fewest since March 2005. That represented a 6.2 months’ supply at last month’s sales pace, the lowest since April 2006 and down from a 7.2 months’ supply in November.
However, the NAR said that the inventory of unsold homes tends to decline in winter.
A supply of six months is generally considered ideal and anything higher suggests prices will decline further.
The median sales price fell 2.5 percent to US$164,500 last month from a year ago. For last year as a whole, prices dropped 3.9 percent to an average of US$166,100, the lowest since 2002.
Further pressure could come in the months ahead as banks finish working out kinks in the foreclosure process and push more homes onto the market.
“That so-called ‘shadow’ inventory has to come to the market eventually and will keep downward pressure on home prices long after a pickup in building and sales activity,” said Ellen Zentner, a senior economist at Nomura Securities in New York.
The Federal Reserve has suggested a number of ways other policymakers could step in to help the beaten-up market, including giving government-controlled mortgage finance firms Fannie Mae and Freddie Mac a bigger role in refinancing loans.
Some officials at the Fed say the central bank should consider further purchases of mortgage-backed securities as a way to help spur a stronger recovery, but no action is expected at a policy meeting on Tuesday and Wednesday.
The data on previously owned homes was just the latest in a number of signals on housing to show improvement, gains economists pinned to an improving labor market.
Data earlier this week showed single-family home starts rose for a third straight month last month and optimism among builders this month was the highest in four-and-a-half years.
“It is very encouraging that the current phase of the recovery is being driven by economic fundamentals as opposed to being fostered by temporary stimulus,” said Millan Mulraine, a senior macro strategist at TD Securities in New York.
Existing home sales last month were up 3.6 percent from a year earlier. A total of 4.26 million homes were sold last year, up 1.7 percent from 2010.