23 September 2010 19:39 [Source: ICIS news]
WASHINGTON (ICIS)--US sales of existing homes rose by 7.6% in August from July, the National Association of Realtors (NAR) said on Thursday, a marked turnaround from the 27% nose-dive decline in July that set a 15-year record low.
The association said that sales of existing homes rose to a seasonally-adjusted annual rate of 4.13m in August, compared with the upwardly revised figure of 3.84m in July.
While the August upturn was welcomed by the housing industry, association economist Lawrence Yun noted that home sales remained subpar.
The August figure of 4.13m units was still 19% below the level of activity seen in the same month last year, when the federal tax credit incentive for home buyers was still in play.
That tax credit programme expired in April, and the housing sector fell again in its wake.
“The housing market is trying to recover on its own power without the home buyer tax credit,” Yun said.
“Despite very attractive affordability conditions, a housing market recovery will likely be slow and gradual because of lingering economic uncertainty,” he said.
Yun noted that the housing sector is still struggling to recover despite historically low home prices and record-low mortgage interest rates, which stood last month at 4.43% for a 30-year fixed loan - compared with the 5.19% rate seen in August last year.
Despite those favourable buying conditions, tight lending standards and a continuing flood of foreclosed homes are keeping home sales low, said NAR president Vicki Golder.
In addition, the national inventory of homes for sale eased only slightly in August, falling by 0.6% from July to 3.98m residences available for purchase, the association said.
With nearly 4m homes for sale on the market, at current sales rates the overhang of available properties would last for 11.6 months, the association noted.
The August inventory figure was an improvement from the 12.5-month supply seen in July, but it was still much higher than the 9-month inventory level seen in June, a period when the year-long federal tax credit programme was still having some impact on the market.
In normal economic times, the inventory of unsold homes on the market would range between four and six months of supply.
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