Housing recovery gains traction

Mon Nov 19, 2012 1:26pm EST
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By Jason Lange

WASHINGTON (Reuters) - Home resales rose in October and a gauge of homebuilder sentiment climbed to a six-year high in November, signs of surprising vigor in the country's still-struggling housing market.

The National Association of Realtors said on Monday that existing home sales climbed 2.1 percent last month to a seasonally adjusted annual rate of 4.79 million units, beating forecasts by Wall Street economists.

Separately, strengthening demand for new homes drove an increase in a monthly measure of home builder sentiment, which hit a more than six-year high in November, topping even the most optimistic forecast in a Reuters poll of analysts.

Rising home prices and a faster pace of sales have shown the housing market has finally turned the corner this year. The market collapsed when a mortgage debt bubble burst in 2006, helping trigger the 2007-09 recession.

The data on Monday suggested the recovery in housing is advancing even faster than many analysts had expected.

"The housing market is continuing to improve. It's probably improving more than most economists were projecting earlier this year," said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts.

The reports also support the view that the broader economic recovery is becoming increasingly self-sustaining, with job creation helping drive home sales, which in turn are supporting economic growth. Home building is expected to add to economic growth this year for the first time since 2005.

U.S. stock prices rose sharply, with investors heartened by the housing data and signs that lawmakers are making progress in talks aimed at avoiding sharp tax hikes and government spending cuts next year. Yields on U.S. government debt also rose.   Continued...

A "for sale" sign is seen at a boat yard just off the Milwaukee Harbor in Milwaukee November 2, 2012. REUTERS/Darren Hauck