Home sales vault to 18-month high as supply improves

Wed Apr 22, 2015 2:14pm EDT
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By Lucia Mutikani

WASHINGTON (Reuters) - U.S. home resales surged to their highest level in 18 months in March as more homes came on the market, a sign of strength in housing ahead of the spring selling season.

The fairly upbeat report from the National Association of Realtors on Wednesday implied the economy was regaining some momentum after hitting a speed bump at the start of the year.

But tepid retail sales and weak factory data suggested the growth rebound will probably be insufficient to convince the Federal Reserve to raise interest rates in June.

"It's consistent with strong growth in the second quarter. We should have a solid spring selling season and should see the housing market continuing to improve through 2015," said Gus Faucher, senior economist at PNC Financial Services Group in Pittsburgh.

Existing home sales increased 6.1 percent to an annual rate of 5.19 million units in March, the highest level since September 2013. The percent rise was the largest since December 2010. Last month's sales outpaced economists' expectations for a 5.03 million-unit rate.

The outlook for the spring selling season, which runs from April through August, was also boosted by a separate report from the Mortgage Bankers Association showing applications for loans to purchase homes jumped 5 percent last week to the highest level since June 2013.

It was the fourth time in five weeks that purchase applications rose and economists attributed this to moves by the government to ease credit conditions for first-time buyers.

Home sales have been constrained by a shortage of properties on the market, which has pushed up home prices and limited choice for potential buyers. Fewer homeowners are defaulting on their mortgages, meaning fewer foreclosed properties in the pipeline to boost supply.   Continued...

A home for sale sign hangs in front of a house in Oakton in Virginia March 27, 2014.   REUTERS/Larry Downing