"There is continued payroll growth. We haven't had any dramatic increase in mortgage rates. More properties are coming on the market."
- Tom Simons, Economist at Jefferies LLC
Sales of existing U.S. homes increased more than expected in May, adding to evidence the sector is stabilizing after a weather-influenced quarter. On annual basis, sales rose 4.9% to 4.89 million, the most since October, compared to a 4.66 million pace in April, according to the National Association of Realtors. Prices, however, rose at the slowest pace in more than two years. It is also projected that even more Americans may feel encouraged to come into the market amid rising supply of houses, smaller price increases, rising employment and ultra-low borrowing costs, while robust demand prompts a pickup in construction activity. The median price of an existing home climbed as much as 5.1% from last year to reach $213,400, with the 12-month gain being the smallest since the year ended March 2012. The number of previously owned homes on the market rose 6% from the previous year to 2.28 million. However, the housing recovery still has a way to go.
Meanwhile, a separate report from Markit showed "a robust and accelerated improvement" in the U.S. manufacturing sector performance. Manufacturing PMI rose for the third straight month to 57.5 in June up from 56.4, indicating the strongest pickup in overall business conditions since May 2010. In addition to that, the average pace if growth in the second quarter was the steepest for any quarter since the data collection began in 2007.
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