US home sales increased in February by 2.9 per cent sparking hopes the housing market is stabilising.
According to the National Association of Realtors (NAR), existing house sales rose 2.9 per cent to a seasonally adjusted annual rate of 5.03 million units in February from a pace of 4.89 million in January, but remains 23.8 percent below the 6.60 million-unit level recorded in February 2007.
Lawrence Yun, NAR chief economist, said: “We’re not expecting a notable gain in existing-home sales until the second half of this year, but the improvement is another sign that the market is stabilising.”
“Buyers taking advantage of higher loan limits for both Federal Housing Association (FHA) and conventional mortgages will unleash some pent-up demand. As inventories are drawn down, prices in many markets should go positive later this year.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 5.92 percent in February from 5.76 percent in January; the rate was 6.29 percent in February 2007.
The US Federal Reserve has slashed interest rates since September last year when the housing market first showed signs of a slump, and the cuts appear to have had an effect.
The rate presently stands at 2.25 per cent, following a 0.75 reduction on March 18th.
The news has boosted the US stock markets – and consequently global markets – as investor confidence is raised.
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