American home sales are set for bumpy recovery

 
Julian Harris
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HOME sales in the US bounced back in March, reflecting “uneven recovery” in the housing sector, data showed yesterday.

Sales of existing homes jumped 3.7 per cent compared to February, exceeding expectations, the National Association of Realtors (NAR) said.

Compared to March 2010, sales were 6.3 per cent lower – yet this partially reflects elevated transactions this time last year, due to tax credits for home-buyers, the NAR claimed.

“Existing-home sales have risen in six of the past eight months, so we’re clearly on a recovery path,” said NAR’s bullish economist, Lawrence Yun.

However, ING’s Teunis Brosens disagreed: “March sales growth is mostly due to the growing number of distressed sales (foreclosures and short sales), while ‘healthy’ sales are stalling,” Brosens said.

“We expect the housing market to lag, rather than lead the recovery this year and next.”

Rising inflation may be prompting stronger demand for homes, said NAR president Ron Phipps.

“The typical buyer today plans to stay in a home for 10 years, while rents are projected to rise at faster rates over the next few years,” Phipps said.