U.S. homes sell at brisk pace, but Las Vegas differs

WASHINGTON — For the first time since 2009, previously occupied U.S. homes are selling at a pace associated with a healthy market.

Sales jumped 6.5 percent in July to a seasonally adjusted annual rate of 5.4 million, the National Association of Realtors said Wednesday. Over the past 12 months, sales have surged 17.2 percent.

The trend shows that housing remains a driving force for the economy even as mortgage rates have risen from record lows.

Buyers have been purchasing previously occupied homes at an annual pace above 5 million for three straight months. The last time that happened was in 2007. Sales are far above the 3.45 million pace of July 2010, the low point after the housing bubble burst.

Analysts generally think a healthy sales pace is roughly between 5 million and 5.5 million.

Buyers last month weren’t dissuaded by higher long-term mortgage rates, which have jumped, on average, a full percentage point since early May. The higher rates might have led some potential buyers to purchase in July out of fear that rates will rise further.

The story in Las Vegas was different. Sales of existing homes were up only slightly year over year in July, rising 1.7 percent to 3,633 closings, according to the Greater Las Vegas Association of Realtors. Local sales slid 0.24 percent from June to July. And compared with July 2009’s 4,602 sales, the most recent month’s numbers were off 21 percent.

Local experts blame a lack of supply for the slumping sales. The local market has about one month’s supply of available resale homes on the market. A healthy market would typically have six months of inventory.

July’s national report captures completed sales, which typically reflect mortgage rates that were locked in a month or two earlier. A fuller effect of higher mortgage rates might not be clear until August home sales are reported next month.

Sales could slow later this year, especially if the Federal Reserve curbs its bond purchases. The Fed’s bond purchases have kept long-term interest rates, including mortgage rates, historically low.

For now, the average rate on the 30-year fixed mortgage remains low by historical standards. It was 4.4 percent last week.

“The one-percentage-point jump in mortgage rates in the past year doesn’t seem to have slowed home sales,” BMO Capital Markets senior economist Sal Guatieri said. “The jump in rates might have pulled forward some purchases, so a few more months of data are likely needed to wave the all-clear flag.”

Steady hiring and low mortgage rates have helped the housing market recover over the past year. Banks have begun easing tight credit standards, which made it hard for many people to get mortgages.

The number of available homes is slowly rising and should support more sales. The supply of unsold homes rose 5.6 percent in July to 2.28 million. That’s still 5 percent below last year’s figure. A limited supply has pushed up prices nationwide.

Wednesday’s report had other positive signals. The proportion of distressed sales including foreclosures stayed at 15 percent, the lowest since the Realtors began tracking the figure in October 2008.

And investors made up just 16 percent of purchases, down from a peak of 22 percent in February. The smaller proportion of investors suggests the market is slowly returning to normal.

One troubling sign: First-time homebuyers aren’t entering the market. They usually help drive rebounds in home sales. But they made up only 29 percent of sales in July, below the 40 percent level consistent with a healthy market.

A brighter housing market helps the broader economy. Rising home sales boost spending at furniture and home supply stores.

Higher home values make consumers feel wealthier, which lifts their confidence and encourages more spending. Consumer spending drives roughly 70 percent of economic activity.

Sales of new homes also have been surging. They rose in June at their fastest pace in five years, to a seasonally adjusted annual rate of 497,000. Though new-home sales remain below the 700,000 pace consistent with healthy markets, they’ve risen 38 percent in the past 12 months.

On Wednesday, Toll Bros., the luxury homebuilder, issued an upbeat outlook. The company said its signed contracts in the quarter that just ended climbed 47 percent, and the average price of homes it delivered rose 13 percent.

Shares of Toll and other builders have generally fallen since early spring on fears that higher mortgage rates will cool home purchases later this year.

Review-Journal writer Jennifer Robison contributed to this report.