Existing home sales in the U.S. went up in June to reach its highest since October 2013 as hiring improved in the country and the economy added more jobs, according to a latest report by the National Association of Realtors (NAR).
Total existing home sales spiked to 2.6 percent to a seasonally adjusted 5.04 million in June, up from May's adjusted 4.91 million.
Although the pace is slower and figures are 2.3 percent since the same time last year, this is the strongest growth the industry posted since October 2013 when existing home sales reached 5.13 million, the study claimed.
Sales of existing single-family homes rose 2.5 percent to 4.43 million in June from May's adjusted 4.34 million. Condo and co-op sales also edged up 3.4 percent to 610,000 apartments in June, up from May's adjusted 590,000.
NAR noted that home inventory rose significantly too, easing up the pent-up demand from the first few months of 2014. Total housing inventory was up 2.2 percent to 2.30 million houses in June. This represents a 5.5-month supply at the current pace of sales. Prices also gained 2.3 percent on a year-over-year basis in June.
"Inventories are at their highest level in over a year and price gains have slowed to much more welcoming levels in many parts of the country. This bodes well for rising home sales in the upcoming months as consumers are provided with more choices," Lawrence Yun, chief economist at NAR, said in a statement.
Yun added that the housing recovery was headed in the right direction with mortgage rates still at record lows boosting affordability. The NAR attributed the steady growth in home sales to a better hiring report. However, they warned that a sluggish wage growth was holding back a full-fledged recovery.
"Hiring has been a bright spot in the economy this year, adding an average of 230,000 jobs each month. However, the lack of wage increases is leaving a large pool of potential homebuyers on the sidelines who otherwise would be taking advantage of low interest rates. Income growth below price appreciation will hurt affordability," Yun added.
Indeed, the NAR report found first-time home buyers only accounted for 28 percent of the total sales, just a tad bit up from May's 27 percent.
"Access to affordable credit continues to hamper young, prospective first-time buyers. NAR recommends that FHA reduce high annual mortgage insurance premiums for all qualified homebuyers and eliminate the insurance requirement for the life of the loan. FHA's HAWK program is a good start, but it should offer further reductions for participating home buyers," Steve Brown, president of NAR, added in the statement.
Experts were positive about the report.
"As in the past two months, stronger sales paired with rising prices cause inventories to expand, which sets the stage for another solid month to come," Patrick Newport and Stephanie Karol, economists at IHS Global Insight wrote in a research note, according to USA Today.
Some, however, are worried about a sustainable growth.
"Without a better pace of income growth, any increase in mortgage rates...will take a bite out of home sales. So, while June's report is encouraging, the real test will be whether or not improving sales will be sustained over coming months," Richard Moody, chief economist at Regions Financial Corp told The Wall Street Journal
