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.
The housing market has been one of the economy’s weakest links as it recovers from the 2007-09 recession, but data in recent months has raised hopes the sector has touched bottom.
The government said last week that groundbreaking for homes rebounded in April, which helped to dampen fears that the recovery in the world’s largest economy was stagnating after tepid job growth last month.
While job creation has slowed in recent months, Yun said it was enough to get more people buying homes.
“Now with the jobs creation and high affordability this is a very good combination,” he said.
March’s sales pace was revised marginally lower to 4.47 million units from the previously reported 4.48 million units. Economists polled by Reuters had expected sales at a 4.60 million-unit sales pace last month.
Inventories rose to 2.54 million, which Yun also attributed to seasonal factors. April tends to be one of biggest months of the year for new homes going on the market, he said.
Additional reporting by Ellen Freilich in New York; Editing by Andrea Ricci