Home resales rise, boding well for economy

Tue May 22, 2012 11:27am EDT
 
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By Jason Lange

WASHINGTON (Reuters) - Home resales rose in April to their highest annual rate in nearly two years and a falloff in foreclosures pushed prices higher, hopeful signs for the country's economic recovery.

The National Association of Realtors said on Tuesday that existing home sales increased 3.4 percent to an annual rate of 4.62 million units last month, the highest since May 2010.

"The housing market is showing some signs of life," said Gary Thayer, a macro strategist at Wells Fargo Advisors in St. Louis.

Nationwide, the median price for a home resale jumped to $177,400 in April, up 10.1 percent from a year earlier. That was the biggest year-over-year increase since January 2006.

Prices rose in large part because a drop in foreclosures led to fewer distressed sales, said NAR economist Lawrence Yun.

At the same time, Yun said some seasonal factors might have also played a role in the price increase, because families tend to buy in the spring, which means bigger homes comprise a larger share of total sales.

Yun still thinks overall price increases in 2012 will be muted, rising between 1 percent and 2 percent.

Stocks rose as investors bet the data was another sign the housing market may be on the road to recovery. Treasuries prices fell.   Continued...

 
A newly constructed home is seen for sale in Joplin, Missouri May 16, 2012. REUTERS/Eric Thayer