WASHINGTON – The recovery of the U.S. housing market is looking steadier and more sustainable, a trend that will likely add to economic growth in 2012 for the first time in seven years.
Purchases, construction and prices are gradually but consistently increasing, though they remain far below levels seen in a healthy economy. Sales of previously occupied homes rose 2.3 percent in July from June to a seasonally adjusted annual rate of 4.47 million, the National Association of Realtors said Wednesday. Over the past 12 months, sales have jumped more than 10 percent.
New-home sales have been strengthening, too. Toll Brothers, a builder of high-end homes, said Wednesday that its enjoying its most sustained demand in more than five years.
The evidence that the housing market is recovering ... is fairly clear across a wide range of reports, said John Ryding, an economist at RDQ Economics, a forecasting firm. Housing is now becoming a small positive for the economic outlook.
Thats a big change for an industry that has been a major drag on the economy since the housing bubble burst more than five years ago. Michelle Meyer, an economist at Bank of America Merrill Lynch, forecasts that home construction will add 0.2 percentage points to growth this year. That would make 2012 the first full calendar year in which housing has added to growth since 2005.
Other recent reports add to the picture of an improving housing market, though one thats recovering at a painfully slow and uneven pace.
Home prices are rising nationwide. They increased 2.2 percent from April to May, according to one leading index. That was the second straight increase after seven months of flat or declining prices.
The median U.S. home price rose 9.4 percent in July compared with a year earlier to $187,300, the Realtors group said. That was the biggest annual gain in 6 1/2 years. One reason for the increase is that foreclosed homes, which usually sell at steep discounts, are making up a smaller proportion of sales than they did a year ago.