US home sales surge boost for economy

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US home resales surged to a five-and-a-half-year high in May as first-time buyers stepped into the market, the latest indication that housing and overall economic activity were gathering steam in the second quarter.

The National Association of Realtors said yesterday existing home sales increased 5.1 per cent to an annual rate of 5.35 million units, the highest level since November 2009.

That left sales this year on track for their strongest performance since 2007.

“It suggests that the US housing market recovery is back on track after the missteps earlier this year. We expect this upbeat tone in the housing recovery to continue as the favourable domestic fundamentals begin to reassert themselves,” said Millan Mulraine, deputy chief economist at TD Securities in New York.

Last month’s rise unwound April’s surprise drop in purchases, which economists had dismissed as a blip given that forward-looking indicators on home sales had been fairly strong.

The Realtors group revised April’s sales pace up to 5.09 million units from the previously reported 5.04 million units.

First-time buyers accounted for 32 per cent of transactions, the largest share since September 2012. Still, the share remains well below the 40 per cent to 45 per cent that economists and realtors say is required for a robust housing market.