Housing prices are soaring across the country, but not as much in Toledo.
WASHINGTON — A jump in sales of previously occupied homes and further gains in home construction suggest the U.S. housing recovery is gaining momentum.
Two reports filed on Wednesday follow other signs of steady progress in the housing market after years of stagnation. New-home sales are up, builder confidence has reached its highest level in more than six years, and increases in home prices appear to be sustainable.
Sales and construction rates are still below healthy levels, economists caution. But the improvement has been steady.
The broader economy is likely to benefit. When home prices rise, Americans typically feel wealthier and spend more — a point Federal Reserve Chairman Ben Bernanke made last week after the Fed unveiled a plan to lower mortgage rates. Consumer spending drives 70 percent of economic growth.
“We have a real housing recovery taking root, and that has positive implications for the broader economy,” said Sal Guatieri, senior economist at BMO Capital Markets. “If home prices continue to rise, so, too, will household wealth and consumer confidence.”
Sales of previously occupied homes rose 7.8 percent in August from July to a seasonally adjusted annual rate of 4.82 million, the National Association of Realtors said Wednesday. That’s the highest level since May, 2010, when sales were aided by a federal home-buying tax credit.
U.S. builders broke ground on 2.3 percent more homes and apartments in August than July. The Commerce Department said the annual rate of construction rose to a seasonally adjusted 750,000. The increase has driven the best rate of single-family home construction since April, 2010.
Local and state figures differ from the national numbers, in large part because they are not seasonally adjusted.
Barbara Stout, president of the Toledo Board of Realtors, said completed sales in the city of Toledo in August dropped 3 percent from July. However, pending sales were up 14 percent.
“Part of that is because of where the Labor Day holiday fell and where things closed. We’re expecting September to be up because of that,” she said.
Year-to-date, home sales in Toledo are up 9 percent, Ms. Stout said.
A broader look at the region, including Wood County, shows home sales up 4 percent for the year, with an average sales price up 2 percent, she said.
In Ohio as a whole, home sales were up 12.7 percent in August as compared with August, 2011, according to the Ohio Association of Realtors, which bases its report on Multiple Listing Service. For the first eight months of the year, sales are up 12.9 percent.
The national market has a long way back to full health.
Sales of previously occupied homes remain below the more than 5.5 million that’s consistent with a thriving market. In better economies, homebuilders start twice as many homes.
Strict credit standards and bigger down payment requirements have made it harder for many first-time buyers — who are critical to a housing rebound — to qualify for mortgages.
The number of first-time homebuyers made up just 31 percent of the market in August. In healthier markets, the percentage is more than 40 percent.
For those who can qualify, the market is tempting. Mortgage rates are just above record lows. Prices, on average, are much lower than they were six years ago.
The Fed plans to spend $40 billion a month to buy mortgage bonds for as long as it thinks necessary to make home buying more affordable. Mr. Bernanke said the Fed will keep buying the bonds until the job market improves “substantially.”
One challenge for buyers now is the limited number of homes on the market. There were 2.47 million homes available for sale in August, or 18 percent fewer than the same month in 2011.
Homes are selling more quickly than a year ago. The median amount of time that a home spent on the market was 70 days in August, the Realtors’ group said. A year ago, the median timeframe was 92 days.
And the limited supply has helped lift home prices. The median home price in August was $187,400, the Realtors’ group said. That's slightly lower than July but 9.5 percent higher than August, 2011.