Sales of existing homes in the U.S. touched its strongest level in a year in September, indicating the economy is strengthening as the labor market improves.
Home purchases rose 2.4 percent to an annual rate of 5.17 million units, reported the National Association of Realtors on Tuesday. Demand rose 1.9 percent in comparison with September 2013 when the data isn’t adjusted for seasonal fluctuations.
So far, employers have absorbed 2 million new workers this year in the U.S., boosting the property market. Sales are expected to increase towards the end of this year as mortgage rates decline due to weak growth in emerging markets and Europe, making real estate within the reach of first-time buyers.
The decline in borrowing costs “is encouraging for the housing market recovery,” Brittany Baumann, a New York-based economist at Credit Agricole CIB, told Bloomberg News. “We see upward trajectory over the next few months, but it’s going to take further strengthening in the job market, low mortgage rates, and a special importance on easing of mortgage lending standards.”
Economists in a Bloomberg survey had expected sales to increase to an annual rate of 5.1 million units. The falling mortgage rates are expected to make homes more affordable. The median 30-year, fixed rate mortgage plunged to 3.97 percent in the week through Oct. 16, its lowest level since June 2013.
The improving labor market is also a boon to real estate market; it is projected that if things remain as they stand, employment will increase 2.7 million this year. This would be the strongest jobs gain since 1999.
The Labor Department reported that unemployment rate touched 5.9 percent in September, its lowest level in six years. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of this story; Jonathan Millet at email@example.com