Washington - Sales of previously owned homes climbed to a three-year high in November, reinforcing forecasts that the industry is set to contribute to U.S. annual economic growth for the first time since 2005.
Purchases of existing houses increased 5.9 percent to a 5.04 million annual rate, the most since November 2009, the National Association of Realtors reported today in Washington. The median forecast of 82 economists surveyed by Bloomberg projected a 4.9 million rate.
"Housing is going from being a powerful headwind to the economy to what will be a powerful tailwind," said Mark Zandi, chief economist at Moody's Analytics Inc. in West Chester, Penn. "It turned around in 2012, and I think it's going to take off in 2013."
Rising real-estate values are helping to lift consumer confidence, which rose to an eight-month high last week, according to the Bloomberg Consumer Comfort Index. Another report showed the economic outlook weakened in November, highlighting the risks posed by potential federal spending cuts and tax increases, after growth picked up more than initially reported in the third quarter.
The U.S. economy grew at a 3.1 percent annual rate in the third quarter, compared with a previously estimated 2.7 percent advance, according to Commerce Department figures. The report reflected the first gain in state and local government spending in three years, more consumer purchases and a smaller trade gap.
The index of leading indicators fell in November, pointing to a slowdown early next year. The Conference Board's gauge of the outlook for the next three to six months dropped 0.2 percent after a revised 0.3 percent gain in October that was larger than initially reported, the New York-based group said.
Thursday's report from the Realtors group showed sales were strongest since a first-time buyer credit was first due to expire in November 2009. Excluding the period influenced by the tax break, sales were the strongest since July 2007, before the recession began.
The median home price increased 10.1 percent to $180,600 from $164,000 in November 2011. Sales of higher-priced houses are a growing share of the market, driving the advance, Lawrence Yun, NAR chief economist, said in a news conference as the figures were released.
Improving values are helping to drive gains in consumer confidence. The Bloomberg Consumer Comfort Index climbed to minus 31.9 in the period ended Dec. 16, the highest level in eight months, from minus 34.5 in the prior week. The gauge is within a half point of a four-year high reached in April.
Shoppers are spending in part as a result of housing-market gains, said Robert Hull, financial officer at Lowe's, based in Mooresville, N.C.
This year "represents the first year of growth across all of the core housing metrics: housing turnover, single-family starts and median home prices," Hull said at a Dec. 5 investor conference. "These recent positive trends are helping consumers regain confidence in both their local housing markets and their home value."
Furniture sales at Pier 1 Imports have been gaining momentum all year, president and chief executive officer Alexander Smith said. On Dec. 13, the company reported its 13th consecutive quarter of sales and profit growth, due in part to "what we view as the very beginnings of a long-awaited recovery in the housing market," Smith said on an earnings call.
The job market remains an area of weakness for the economy, explaining why Federal Reserve policy makers this month said they would keep the benchmark interest rate near zero as long as unemployment remains above 6.5 percent, and if the Fed projects inflation of no more than 2.5 percent in one or two years.
Thursday's home-sales figures are the latest evidence of strength in the industry at the heart of the last recession. The number of building applications issued in November rose to a four-year high, Commerce Department data showed Wednesday.
Residential construction may add to economic growth this year for the first time since 2005, boosting gross domestic product by 0.3 percentage point, according to Joseph LaVorgna, chief U.S. economist at Deutsche Bank in New York. That contribution may double next year and reach about 1 percentage point when related industries such as furnishings and remodeling are added, he said last week.
"The housing recovery should pick up strength," said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Fla.