U.S. existing home sales at one-year high, prices up

Tue Oct 21, 2014 1:39pm EDT
 
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By Lucia Mutikani

WASHINGTON (Reuters) - U.S. home resales raced to a one-year high in September, the latest indication the housing market recovery is gradually getting back on track.

A separate report on Tuesday showed service sector activity in the nation's mid-Atlantic region picked up speed this month, another signal suggesting underlying strength in the economy.

The National Association of Realtors said existing home sales increased 2.4 percent to an annual rate of 5.17 million units, the strongest reading since September of last year.

That was above economists' expectations for a rise to a 5.10 million unit pace and more than reversed August's decline, which had pushed down sales to a 5.05 million unit pace. Still, sales were 1.7 percent below those for September of last year.

"The housing recovery continues to move along sluggishly, as consumers are stuck between tight credit standards and limited wage growth," said Sophia Kearney-Lederman, an economist at FTN Financial in New York.

Housing is slowly regaining its footing after activity stalled in the second half of 2013 following a run-up in mortgage rates. While it continues to be hobbled by sluggish wage growth, a recent decline in mortgage rates should help support sales.

The 30-year mortgage rate fell to an average of 3.97 percent last week from 4.12 percent in the week ended Oct. 9, according to data from mortgage finance firm Freddie Mac. The decline reflected a sharp drop in U.S. Treasury debt yields as traders pushed back expectations for the first interest rate hike by the Federal Reserve against a backdrop of troubling economic news from overseas and a big sell-off in global stock markets.

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A real estate sign advertising a home for sale is pictured in Vienna, Virginia, outside of Washington, October 20, 2014.  REUTERS/Larry Downing