Existing home sales up for 3d straight month

Purchases climbed 3.6 percent to an annual rate of 4.89 million, stronger than forecast and the highest level since October, the National Association of Realtors said yesterday.

Sales gains buttress Federal Reserve chairman Ben S. Bernanke’s remarks this week that the worst housing downturn in eight decades appears to be moderating. Treasury securities dropped on the improving economic outlook, while stocks climbed as corporate earnings were also better than anticipated.

“We have finally bottomed out,’’ said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh. Improved affordability “is stalemating the drag from higher unemployment,’’ he said. Hoffman forecast sales would rise to a 4.9 million pace.

The stabilization in housing is being spurred by tax incentives, lower borrowing costs, and foreclosure-driven declines in prices, economists said. A record drop in household wealth, due in part to the plunge in property values, and mounting joblessness are among the reasons rebounds in housing and the economy may be drawn out.

Economists forecast existing-home sales would rise to a 4.84 million rate from a previously reported 4.77 million for May, according to the median of 68 projections in a Bloomberg News survey. Estimates ranged from 4.7 million to 5 million.

Home re-sales were down 0.2 percent compared with a year earlier. The median price of an existing home fell 15 percent to $181,800 from $215,000 in June 2008, the realtors’ association said.

The number of houses on the market fell 0.7 percent to 3.82 million in June, the group said. At the current sales pace, it would take 9.4 months to sell those homes compared with 9.8 months in May.

A seven months’ supply is usually consistent with stabilization in prices, Lawrence Yun, chief economist for the association, said in a press conference. It may take until the end of this year or early 2010 before property values steady, he said.

Mounting foreclosures have accelerated the drop in prices. More than 1.5 million homeowners had their homes seized by banks or received default or auction notices in the first half of the year, a 15 percent increase from a year earlier and a record, RealtyTrac Inc., an Irvine, Calif., company said last week.

Falling property values have both helped and hurt demand. Some Americans who owe more on their mortgages than their homes are worth can’t sell their properties to trade up or to move to areas of the country where more jobs are available.

Seeking to stem the slump in sales and lower borrowing costs, Fed policy makers committed to a $1.25 trillion program to purchase securities backed by home loans. Those purchases, as well as direct government purchases of Treasuries, drove rates on 30-year mortgages to a record low 4.78 percent in April, according to figures from Freddie Mac. Rates have since gravitated above 5 percent.