By Lucia Mutikani
WASHINGTON (Reuters) – Sales of previously owned U.S. homes jumped 7.2 percent in July to mark the fastest pace in nearly two years, a survey showed on Friday, in a strong sign that housing is pulling out of a three-year slump.
Sales in July rose for the fourth straight month to hit an annual rate of 5.24 million units, the highest since August 2007, the National Association of Realtors said. The total beat market expectations of a 5 million unit pace and June’s 4.89 million pace.
July’s increase was the largest monthly gain since the series started in 1999. The last time sales rose for four consecutive months was in June 2004, the NAR said.
The Realtors group heralded the July sales as a turning point, while other observers offered a more cautious view.
“The housing market has decisively turned for the better. We are bouncing back. A combination of first-time buyers taking advantage of the housing stimulus tax credit and greatly improved affordability conditions are contributing to higher sales,” NAR Chief Economist Lawrence Yun said.
With distressed sales accounting for 31 percent of the transactions in July, inventories rising and home prices remaining depressed, analysts said the housing market was not out of the woods yet.
The national median home price was $178,400 in July, down 15.1 percent from the same period last year, weighed down by distressed sales — sales in foreclosure or close to it — as such homes typically sell for 15 to 20 percent less than traditional homes.
“It’s really going to take home prices to broadly stabilize and come back a bit before you want to characterize the housing market as being fully recovering,” said Craig Thomas, a senior economist at PNC Financial Services Group in Pittsburgh.
“I will say there is not an indicator out there that doesn’t suggest we are not moving in that direction.”
White House spokesman Robert Gibbs said the housing market appeared to be bottoming out.