US existing home sales shoot up by nearly 8% in August

19 September 2012 17:05  [Source: ICIS news]

WASHINGTON (ICIS)--US sales of existing homes shot up by nearly 8% in August from July, the National Association of Realtors (NAR) said on Wednesday, and the trade group said that the data show that the housing sector is in a steady recovery.

In its monthly report, the association said that sales of existing homes were at a seasonally adjusted annual pace of 4.82m units in August, up by 7.8% from the July sales rate of 4.47m.

Last month’s sales of existing homes – which includes single-family residences, condominiums and co-ops – were also 9.3% higher than the pace seen in August 2011, the association said.

NAR chief economist Lawrence Yun said that even as existing home prices have begun to show steady if modest gains, record-low mortgage loan interest rates are driving home buyers into the market.

“The housing market is steadily recovering with consistent increases in both home sales and median prices,” Yun said, adding that “More buyers are taking advantage of excellent housing affordability conditions.”

The average interest rate on a 30-year fixed-rate home loan was 3.6% in August, Yun noted, up just slightly from the record low 3.55% seen in July. The rate was 4.27% in August last year, he said.

Even as existing home prices continue to rise and banks’ lending criteria remain strict, the gains in home sales are a “testament to the sizable stored-up housing demand that has accumulated in the past five years”, Yun said.

The association noted that the national median price for an existing home rose to $187,400 (€144,300) in August, up by 9.5% from August 2011 and the sixth straight monthly advance in housing prices.

“The last time there were six back-to-back monthly price increases from a year earlier was from December 2005 to May 2006,” the association said. That period was the last high-point in the US housing boom of 2003-2006, and the housing bubble began to deflate in June-July 2006.

While sales of existing homes are growing, the association said the market could be stronger still were it not for continuing tight credit conditions.

NAR president Moe Veissi said that he expects US total existing home sales will be 8% to 10% above 2011, but it could be better.

“Some buyers are frustrated with mortgage availability,” Veissi said, “but if most of the financially qualified buyers could obtain financing, home sales this year would be about 10% to 15% stronger."

The gain in sales of existing homes followed news on Wednesday of a 2.3% advance in US new home construction in August.

The US housing industry is a key downstream consumer sector for the nation’s chemicals manufacturers, driving demand for a broad range of chemicals and plastics used in home construction or in production of end-use components.

($1 = €0.77)

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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