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1/22/2016 10:00:00 AM Write a Letter to the Editor Write a letter to the Editor

US Home Sales Surge More Than Forecast, Helped by Warmer Weather

Damiel Acker/Bloomberg News

Purchases of previously owned U.S. homes rose more than projected in December, helped in part by warmer weather and wrapping up the best year since 2006.

Contract closings jumped 14.7%, the most on record, to a 5.46 million annualized rate, figures from the National Association of Realtors showed Jan. 22. The median forecast in a Bloomberg News survey called for a gain to 5.2 million. Prices picked up as inventories eased. For all of 2015, sales climbed to 5.26 million from 4.94 million.

The December sales rebound was driven by industry adjustments to new mortgage regulations that had delayed closings a month earlier. Strong hiring and low borrowing costs are drawing more prospective homebuyers into the market.

“Things are looking good for housing,” Stan Shipley, an economist at Evercore ISI in New York, said before the report. “Demand is increasing, and inventory is tight. The unemployment rate is down, mortgage rates are low and household formation is starting to rise.”

Bloomberg survey estimates for sales of previously owned homes ranged from 4.82 million to 5.5 million. Purchases slumped 10.5% to a 4.76 million pace in November.

A change in regulations that consolidated the closing process and the introduction of new forms that are processed by lenders and title companies led to delays in November, NAR Chief Economist Lawrence Yun said at a press conference as the report was released.

The data are “confirming it was delays, not cancellations,” he said. “All those rolled over into December.”

The median price of an existing home rose 7.6% from December 2014 to reach $224,100. For all of 2015, the median cost climbed 6.7% to $224,400.

While increasing property values allow homeowners to feel wealthier and make it easier for them to trade up, they make it less affordable for some prospective buyers.

First-time buyers accounted for 32% of all purchases, matching the highest since August and up from 30% a month earlier. All-cash transactions made up about 24% of purchases.

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By Shobhana Chandra
Bloomberg News

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