WASHINGTON – Sales of previously owned U.S. homes climbed in April to the highest level in more than three years even as the market remained constrained by a lack of inventory and strict borrowing rules.
Purchases of existing houses increased 0.6 percent to an annual rate of 4.97 million, the most since November 2009, the National Association of Realtors reported today in Washington. The median price rose 11 percent compared with April 2012, the fifth consecutive month that property values advanced more than 10 percent year over year.
The fewest number of homes for sale in more than a decade, lingering lender aversion to housing debt and conservative appraisals are probably preventing the market from making bigger strides. Federal Reserve Chairman Ben S. Bernanke today said policy makers are aware that a jump in interest rates may derail the expansion, a signal central bankers will continue to hold borrowing costs down.
“Housing can still be improved,” said Brian Jones, senior U.S. economist at Societe Generale in New York, who correctly forecast the gain in sales. “There are some problems with people closing,” Jones said. “There are more sales in the pipeline.”
Bernanke said in testimony before Congress that the economy remains hampered by high unemployment and government spending cuts, and tightening policy too soon would endanger the recovery.
“A premature tightening of monetary policy could lead interest rates to rise temporarily but would also carry a substantial risk of slowing or ending the economic recovery and causing inflation to fall further,” Bernanke said. Monetary policy is providing “significant benefits,” he said.
Stocks climbed on the chairman’s remarks. The Standard & Poor’s 500 Index increased 0.5 percent to 1,677.21 at 12:40 p.m. in New York. The S&P Supercomposite Homebuilding Index jumped 2.4 percent.
Central bankers around the world are pushing for additional stimulus to spur their economies. A report today showed U.K. retail sales unexpectedly fell in April, indicating continued weakness in consumer spending. Bank of England Governor Mervyn King and two other Monetary Policy Committee members said slack in the labor market supports the case to increase bond purchases, according to the minutes of their May meeting published today.
Bank of Japan Governor Haruhiko Kuroda today pledged to adjust the central bank’s unprecedented stimulus program as needed after bond yields jumped.
The median forecast of 79 economists surveyed by Bloomberg called for U.S. sales of existing homes to pick up to a 4.99 million pace. Estimates ranged from 4.85 million to 5.1 million. The prior month’s pace was revised to 4.94 million from a previously reported 4.92 million.
At Ryland Group Inc., the builder based in West Lake Village, California, sales are up in all markets and the company reported a first-quarter profit for the first time in six years, President and Chief Executive Officer Larry Nicholson said.
“It’s tough to find any negatives really,” Nicholson said at a May 21 conference. “The industry is obviously in recovery mode. Everything is moving in a positive direction.”
The median price of an existing home climbed to $192,800 last month, the highest since August 2008, from $173,700 a year earlier, today’s report showed.