U.S. sales of previously owned homes unexpectedly surged in August, and prices reached an all- time high, defying predictions that the housing market was peaking.
Existing-home sales rose 2 percent from July to a 7.29 million annual pace last month, the second-highest level on record, the National Association of Realtors said Monday in Washington.
The median price jumped 15.8 percent from August 2004 to a record $220,000, and the supply of homes for sale rose.
“These are tremendous numbers,” said Kevin Harris, chief economist at Informa Global Markets in New York. “There is nothing solid in the latest round of existing-home sales data to show that we’re slowing down.”
The housing market has been the main driver of the U.S. economy this decade, accounting for 50 percent of the overall growth and more than half of the private payroll jobs created since 2001, Merrill Lynch said in a report Aug. 15. Price appreciation helped add $5.2 trillion to Americans’ balance sheets during the current expansion, or 68 percent of all wealth creation, according to the Federal Reserve.
In Denver, September home sales are due out today. August home sales increased 2.6 percent over July, according to independent real-estate consultant Gary Bauer. Year-to-date sales as of August dipped 1 percent to 35,437, compared with 35,801 for the same period last year.
“From a nationwide perspective, there are several areas that are extremely hot, and overall consumer confidence is up,” Bauer said. “People are not only upgrading, but they’re buying second homes.”
The median price of single-family homes sold in the metro area in August hit a record $255,000, up 1.1 percent from July. The median condo price, in contrast, slid slightly during the month, falling from $164,000 in July to $162,499 in August.
The increase in the median home price nationwide in August was the strongest rate of appreciation since July 1979.
“These figures tell you that the Fed has to keep doing more,” said Roger Kubarych, a former Federal Reserve staff economist who is now senior economic adviser at HVB America Inc. in New York. “If it hadn’t been for the energy spike, we’d be talking about real boomlike conditions.”
Two Fed officials said Monday that the economy is likely to get a boost from rebuilding after Hurricanes Katrina and Rita.
