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US home sales jump to highest since May 2010

More good news in housing trends! There has been a jump in sales in previously occupied homes and in new home construction that we haven’t seen since May 2010.According to the National Association of Realtors, previously occupied homes in August rose 7.8 percent to an annual rate of 4.82 million. This is the best it’s looked since the federal home-buying tax credit.For new home building there was a 2.3 percent increase in home and apartment building. Builder confidence is at the highest level in six years and the increase in prices look maintainable.There are a few factors that lead to this housing recovery. A well-known economist states, “Great affordability, pent-up demand and strong investor interest in rental units are driving the market.”Our entire economy should benefit from these changes because as the home prices rise, our citizens tend to feel better and spend more. This drive accounts for 70 percent of our economic growth.To keep mortgage rates low, the Federal Reserve plans to spend 40 billion a month on mortgage-backed securities. This is important because our sales still remain below what economists consider a strong market.One thing that is important is the number of first time home buyers who are buying homes. With the strict credit standards it has been more difficult for them to qualify for loans. Traditionally, they make up for 40 percent of home sales.There are fewer foreclosed and short sale homes on the market and the demand for new homes has caused builders to see a brighter future. Jim O’Sullivan, a chief economist at High Frequency Economics sees only good signs ahead and that housing is in a “healthy recovery mode” that should make future home buyers feel confident about buying their next home.

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