"The housing market is poised for further gains and is a key component of the U.S. recovery overall"
- Stuart Hoffman, chief economist at PNC Financial Services Group
The number of sales of recently built homes in the U.S. surged more than initially was expected in June, reaching the highest level in five years, another sign builders are benefiting from a lack of supply of existing properties. According to the Commerce Department, purchases jumped 8.3% to an annualized pace of 497,000 homes, hitting the highest since May 2008 and up from 459,000 a month earlier. Analysts, however, expected a slightly modest reading of just 484,000. On an annual basis, sales of one-family home rocketed 38.1%, registering the biggest gain since the beginning of 1992. However, these figures may lead to a deeper shortage of supply. If the current pace of purchases will be maintained, the 161,000 houses, which were available for sales at the end of June, would be depleted in just 4 months.
Wednesday's report is a sign of relief, as the property market has recently delivered some lukewarm results. The number of existing home sales fell in June, while contractors have cut back on new projects. Nonetheless, the slowdown in homebuilding seems to be temporary, as confidence among constructers is improving during the last couple of months. At the same time, the gains in sales are expected to keep propelling residential construction and home values, contributing to the growth of the world's largest economy.
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