And now for a little good news:
WASHINGTON (Reuters) – Sales of previously owned U.S. homes surged to their highest level in more than two years in September, a survey showed on Friday, providing further evidence the housing market and economy were on the mend.
The National Association of Realtors said sales surged 9.4 percent to an annual rate of 5.57 million units, the highest level since July 2007, from a downwardly revised 5.09 million units in August.
Analysts polled by Reuters had expected September sales to rise to a 5.35 million unit pace from the previously reported 5.10 million units in August.
William Larkin, portfolio manager with Cabot Money Management in Boston, said home sales were bolstered by a government program to give first-time buyers a tax credit.
“The existing home sales data is a good sign for the housing market. I would assume a lot of first-time buyers have scrambled to get this $8,000 credit. That will be the part that is hard to define within the numbers,” he said.
“It definitely looks like the stimulus that is going into housing is starting to form a bottom.”
U.S. stock indexes briefly recouped losses on the data, while government bond prices were little moved.
The housing sector’s collapse and the subsequent global credit crisis helped to push the U.S. economy into recession at the end of December, its worst slump in 70 years.
But the housing market is gradually crawling out of a three-year recession, and analysts believe that in the third quarter residential investment probably contributed to economic growth for the first time since the fourth quarter of 2005.
Signs of recovery in the housing market, coupled with other fairly upbeat data, strongly suggest the economy started growing again in the third quarter after four straight quarters of declining output.
Compared to September last year, existing home sales were up 9.2 percent.
Sales for both new and previously owned homes have boosted by a combination of a the popular $8,000 government tax credit for first-time buyers, low prices and mortgage rates.
But there are fears that the expiration of the tax credit at the end of November could hamper the recovery.
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