U.S. home resales surged in September after two straight months of declines as first-time buyers stepped into the market, pointing to underlying momentum in the economy.
While other data on Thursday showed a bigger-than-expected increase in the number of Americans filing for unemployment benefits last week, the trend continued to suggest that the labor market remains strong. Labor market strength is one of the key factors underpinning the housing market.
“Today’s reports reaffirm that the jobs and housing markets are moving in the right direction. That’s important because the jobs and housing markets are going to be critical to supporting growth in 2017,” said Ryan Sweet, senior economist at Moody’s Analytics in West Chester, Pennsylvania.
The National Association of Realtors said existing home sales rose 3.2 percent to an annual rate of 5.47 million units. That was well above economists’ expectations for an increase to a 5.35 million-unit pace.
First-time buyers accounted for 34 percent of transactions last month, the largest share since July 2012. Still, the share remains well below the 40 percent to 45 percent that economists and realtors say is required for a robust housing market.
September’s strong home sales report came on the heels of data on Wednesday showing a jump in single-family housing starts and overall building permits in September.
The upbeat housing data added to reports on manufacturing and auto sales in suggesting that economic growth picked up in the third quarter after a lackluster performance in the first half of the year. Third-quarter gross domestic product growth estimates are as high as a 2.6 percent annual rate.
But with the supply of houses available for sale remaining low, the rising demand for housing will probably push up prices and constrain future sales.
The PHLX housing index fell .HGX, in line with a broadly weaker U.S. stock market. Shares in the nation’s largest homebuilder D.R. Horton Inc (DHI.N) dropped 1.6 percent and Lennar Corp (LEN.N) fell 1.33 percent.
The dollar rose to a seven-month high against a basket of currencies after European Central Bank President Mario Draghi said the ECB did not discuss ending bond purchases at its latest meeting. Prices for U.S. Treasuries were higher.