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By Alex Kowalski and Michelle Jamrisko
WASHINGTON - Sales of previously owned homes and work on single-family projects climbed in August to the highest levels in two years, signaling the residential real-estate market is contributing to the U.S. economic recovery.
Purchases of existing houses increased 7.8 percent to a 4.82 million annual rate, the most since May 2010, figures from the National Association of Realtors showed today in Washington. The median forecast of 78 economists surveyed by Bloomberg called for sales to increase to a 4.56 million pace. Commerce Department data showed builders began work on the most one- family homes since April 2010.
Record-low mortgage rates, more affordable properties and limited supply of new homes are driving orders at builders such as Toll Brothers Inc. and Hovnanian Enterprises Inc. In addition, sales of distressed properties are starting to account for a smaller share of the market, leading to gains in home values that are laying the groundwork for a sustained economic expansion as household sentiment and finances improve.
“The nascent housing recovery has deepened,” said Ellen Zentner, a senior U.S. economist at Nomura Securities International Inc. in New York, who projected existing-home sales would climb to a 4.85 million rate. “Ultimately, this improvement will lead to a rise in residential wealth, which tends to lift consumer confidence and spending.”
The Standard & Poor’s Supercomposite Homebuilders Index rose 3.8 percent at 12:56 p.m. in New York, while the S&P 500 gained 0.3 percent. The pickup in housing helps explain why the index of builder shares, including PulteGroup Inc. and D.R. Horton Inc., has surged 77 percent this year through yesterday, outpacing a 16 percent gain in the broader S&P 500.
Construction of single-family houses climbed 5.5 percent to a 535,000 rate, the fastest since April 2010, after a 4.5 percent decrease, the Commerce Department said today in Washington. Permits for the building of one-family homes increased 0.2 percent to a 512,000 annual pace, the highest since March 2010.
Beginning construction of all homes rose 2.3 percent to a 750,000 annual rate in August, less than forecast and restrained by a decrease in starts of multifamily dwellings that are volatile month to month.
Work on apartments and other multifamily homes dropped 4.9 percent to an annual rate of 215,000.
The housing rebound extends beyond builders -- from home- furnishings retailers like Lowe’s Cos. and Home Depot Inc. to building materials supplies such as gypsum wallboard-maker USG Corp.
Existing-home sales have improved after reaching a low of a 3.39 million annual rate in July 2010. In the buildup to the subprime lending collapse and recession, purchases reached a peak of 7.25 million in September 2005.
Estimates in the Bloomberg survey for August ranged from 4.45 million to 4.85 million. Compared with a year earlier, purchases increased 11 percent in August, today’s report showed.
The median price of an existing home climbed 9.5 percent to $187,400 from $171,200 in August 2011. Prices have increased in each of the past six months on a year-to-year basis, the best performance since early 2006.
The increase in prices reflects both a reduction in distressed sales and a “genuine” appreciation in property values, Lawrence Yun, NAR chief economist, said in a news conference today as the figures were released.