Sales of Existing U.S. Homes Rise to Second-Highest Since 2007

Sales of previously owned U.S. homes unexpectedly rose in January to the second-highest pace since early 2007, indicating the industry will keep prospering.

Closings, which usually take place a month or two after a contract is signed, advanced 0.4 percent to a 5.47 million annual rate, the National Association of Realtors reported Tuesday in Washington. Prices climbed from January 2015 as the number of dwellings on the market fell.

Near record-low mortgage rates, steady job gains and better wage growth are helping encourage prospective buyers, including first-time purchasers. Further strengthening in residential real estate will support the economy and make up for weakness in manufacturing tied to weaker global growth.

“Consumers are pretty keen to purchase a home,” said Gennadiy Goldberg, an economist at TD Securities in New York. “Slow and steady growth is what we want. It’s really positive for the U.S. economy in general.”

The January sales pace was the second-strongest since February 2007. The median forecast of economists surveyed by Bloomberg called for a 5.33 million annualized rate, with estimates ranging from 5.08 million to 5.55 million. December’s pace was revised to 5.45 million from an originally reported 5.46 million.

Compared with a year earlier, purchases increased 7.5 percent in January before adjusting for seasonal variations. Full Article

Closing Process: The data were volatile in the last two months of 2015 after a change in regulations aimed at consolidating the closing process. The introduction of new forms used by lenders and title companies led to delays in November signings that were subsequently made up in December.

Supply of Homes: Prices have been driven higher because of a lean supply of available houses. The number of previously owned homes for sale fell 2.2 percent from January 2015, to 1.82 million.

At the current sales pace, it would take 4 months to sell those houses, compared with 3.9 months at the end of the prior month. Less than a five months’ supply is considered a tight market, the Realtors group has said.

Home Construction: Residential starts decreased 3.8 percent to a three-month low 1.1 million annualized rate.

Budding wage growth and unemployment at an eight-year low of 4.9 percent in January are conducive to more home sales. Hourly earnings rose more than estimated last month after climbing in the year to December by the most since July 2009.