US existing-home sales blaze record in July
A sizzling report on US existing-home sales and upbeat comments from Federal Reserve chief Ben Bernanke on Friday stoked hopes of recovery from the brutal recession and drove up world stock markets.
US existing-home sales blazed record gains in July, setting a four-month rally for the first time in five years, an industry group said in a report suggesting the US housing crisis is bottoming.
Fed chairman Ben Bernanke added to the bullish sentiment, telling a central bank governors meeting that global recovery prospects "in the near term appear good."
Some analysts said Bernanke, who has steered the world's biggest economy through the worst recession since the Great Depression, provided his clearest signal yet about imminent growth.
"What was kind of a new thing was the prospects of a return of growth in the near term are good," said Scott Marcouiller, senior equity market strategist at Wells Fargo Advisors.
"That was the first time that we?ve heard it come out of his mouth and not written on paper," he said.
The National Association of Realtors reported existing-home sales surged 7.2 percent in July to a seasonally adjusted annual rate of 5.24 million units in July from a pace of 4.89 million in June.
"The monthly sales gain was the largest on record for the total existing-home sales series dating back to 1999," the NAR said.
Sales far outstripped the average consensus forecast of a rate of 5.0 million units and were 5.0 percent higher than a year ago.
"The housing market has lifted off," said Joel Naroff of Naroff Economic Advisors.
The last time sales rose for four consecutive months was in June 2004, and the last time sales were higher than a year earlier was November 2005, the Realtors group said.
"The housing market has decisively turned for the better," said Lawrence Yun, NAR chief economist.
The robust home sales report and the Fed chief's comments sent US and European stock markets surging.
Wall Street major indices closed at fresh year highs. The blue-chip Dow Jones Industrial Average posted a double-digit gain, closing above 9,500 points for the first time since early November.
Europe's main stock markets soared: London's FTSE 100 rose 1.98 percent, Frankfurt's Dax added 2.86 percent and the Paris CAC 40 rocketed up 3.15 percent.
Investors cheered the stabilization in the US housing market, where a bubble collapsed three years ago, sparking a global financial crisis that resulted in the worst world recession in six decades.
Falling prices, spiking foreclosures and a temporary stimulus tax break for first-time homebuyers drove sales. According to a NAR survey, first-time buyers purchased 30 percent of homes in July, and distressed homes accounted for 31 percent of transactions.
President Barack Obama's spokesman said the data showed improvement in the crucial sector after the government's massive efforts to pull the economy back from the brink of depression.
"If you looked over the course of several months, it does appear that the housing market is bottoming out a bit," White House spokesman Robert Gibbs told reporters.
Barclays Capital analysts also were cautious, noting a large jump in mortgage delinquencies that suggested a huge surge in foreclosures was in the pipeline.
"The bottoming process in the housing market is underway, as home sales jump higher, but we believe it will be some time before the market returns to equilibrium," they said in a client note.
The NAR said that 4.09 million existing homes were available for sale at the end of July, an increase of 7.3 percent from June.
At the current sales pace, unchanged from June, the inventory overhang represents a 9.4-month supply and was 10.6 percent lower than the record high level reached a year ago.
The median price of existing homes nationwide was 178,400 dollars in July, a decline of 15.1 percent from July 2008. The median price is the halfway point between the most expensive and the least expensive home sold.
Single-family home sales -- the largest share of the existing-home market -- rose 6.5 percent from the preceding month and were 5.0 percent higher than a year earlier. The median price was 178,300 dollars, 14.6 percent below the July 2008 level.