US home sales hit 5 year high

New figures from the US Department of Housing and Urban Development reveal that sales of new single-family houses in January rose 15.6 percent above the December 2012 rate, and 28.9 percent from the same time last year.

Over 437,000 single family homes were purchased in January, exceeding the forecast of 381,000. Sales have been boosted by low mortgage interest rates, an improving job market and the stabilisation of home prices. The Conference Board’s consumer sentiment index also skyrocketed to 69.6, in the same month cementing a strong start of year with positive recovery signs for the US economy.

In a separate report Standard & Poor’s home price index, which monitors fluctuations in the value of residential property in 20 cities in the US, recorded a 0.9 percent rise in prices from December 2012. It is the 11th consecutive monthly increase. “Home prices ended 2012 with solid gains,” said David Blitzer, chairman of the index committee. “Housing and residential construction led the economy in the fourth quarter.”

The index also indicated that property across the country ended 2012 with strong gains of on average 7.3 percent. All urban centres covered by the report had positive year-on0-year growth, apart from New York, which lost 0.5 percent. “Atlanta and Detroit posted their biggest year-over-year increases of 9.9 percent and 13.6 percent since the start of their indices in January 1991,” explained Blitzer. “Dallas, Denver, and Minneapolis recorded their largest annual increases since 2001. Phoenix continued its climb, posting an impressive year-over-year return of 23 percent; it posted eight consecutive months of double-digit annual growth.”

Despite encouraging figures across the board, house prices remain 29 percent lower than what they were at their peak in 2006. Additional figures collated by RealtyTrac, an American housing data provider, also suggest that up to 26 percent of all homes with outstanding mortgages owe at least a quarter more on their home than what it is worth and are seriously underwater.