Purchases of new homes in the U.S. rebounded in July, bolstering signs the real-estate market is picking up.
Sales climbed 5.4 percent, the biggest gain this year, to a 507,000 annualized pace from a 481,000 rate in the prior month, a Commerce Department report showed Tuesday in Washington. The median forecast of 75 economists surveyed by Bloomberg called for 510,000. Demand had declined 7.7 percent in June.
Demand for new properties is likely to keep expanding amid strong employment, low borrowing costs and a lack of available existing homes from which to choose. The improving outlook may spur more residential construction, contributing to the economic expansion in the second half of the year.
“We’re going to continue to see a recovery in housing,” Jennifer Lee, a senior economist in Toronto for BMO Capital Markets, said before the report. “Housing will continue to show improvement.”
Economists’ estimates for existing home sales ranged from 475,000 to 555,000. The reading for the prior month was previously reported as 481,000.
The median sales price increased 2 percent from July 2014 to $285,900, the report showed.
Purchases rose in three of four U.S. regions, led by a 23.1 percent increase in the Northeast. Demand in the Midwest declined 6.9 percent.
New-home purchases, tabulated when contracts get signed, are considered a timelier barometer of the residential market than purchases of previously owned dwellings. The latter are calculated when a contract closes, typically a month or two later, and account for about 90 percent of the market.
The new-home sales report follows other recent data that indicate the industry is making progress. Existing-home sales rose in July for a third straight month to reach the highest level since February 2007. Residential starts rose in July to a 1.21 million annualized rate, the most in almost eight years.
Buyers are getting help from a strong job market and low borrowing costs.
Fed policy makers “viewed the recent data on housing starts and permits as well as the higher levels of sales and prices as indicative of continued recovery in the housing sector,” according to the minutes of their July meeting released on Aug. 19.