US existing home sales at highest since February 2007 in October

The rate of home sales in the States reached its highest level in annualised terms in almost a decade in October.

Existing home sales grew by 2.0% to reach an annualised pace of 5.60m units (consensus: 5.44m), according to the National Association of Realtors.

In parallel, a preliminary estimate of home sales in September was revised higher from 5.47m to 5.49m.

Sales were up by 5.9% from the same month one year, when they reached 5.29m, and at their loftiest level since the 5.79m reached in February 2007.

NAR chief economist was Lawrence Yun said the revival in the housing market was convincing.

"October's strong sales gain was widespread throughout the country and can be attributed to the release of the unrealized pent-up demand [...]," he said.

"Buyers are having more success lately despite low inventory and prices that continue to swiftly rise above incomes."

Total housing inventory declined 0.5% to 2.02m and was 4.3% below the year-ago level. In terms of the equivalent number of months of sales, they were at 4.3 months, down from 4.4 in September.

"The good news is that the tightening labor market is beginning to push up wages and the economy has lately shown signs of greater expansion. These two factors and low mortgage rates have kept buyer interest at an elevated level so far this fall," Yun added.

The median existing home price increased 6.0% to $232,200.

However, Mickey Levy and Roiana Reid at Berenberg cautioned that the rise might be a function of homebuyers trying to get ahead of rising interest rates.

"The recent jump in mortgage interest rates could affect existing home sales in the near term.

"[...] If this spike in interest rates is sustained, expect to see a sustained drop in existing home sales early next year. After the initial surge in home sales in 2013 following the “Taper Tantrum”, existing home sales declined every month between August 2013 and February 2014," they said.

As of 1515 GMT, the yield on the benchmark 10-year US Treasury note was unchanged at 2.31%.