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In this Feb. 23, 2010 photo, a "Sold in 2 Days" sign is seen at a home for sale in Concord, N.H.

Jim Cole, Associated Press - Ap

U.S. housing market posts more solid gains

  • Article by: CHRISTOPHER S. RUGABER and ALEX VEIGA
  • Associated Press
  • November 20, 2012 - 10:56 PM

WASHINGTON - From purchases and prices to builder sentiment and construction, the U.S. housing market is making consistent gains.

The latest evidence came in reports Monday that sales of previously occupied homes rose solidly in October and that builders are more confident than at any other time in 6 1/2 years.

New-home sales and home-price indexes have reached multi-year highs. And Lowe's Cos. on Monday reported a surge in net income, a sign that home-improvement retailers are benefiting.

Helping drive the housing rebound is growing confidence among builders. An index of builder sentiment compiled by the National Association of Home Builders/Wells Fargo rose to 46 this month, up from 41 in October. It was the highest reading since May 2006, just before the housing bubble burst.

Readings below 50 signal negative sentiment about the housing market. The index last reached that level in April 2006. Still, the index has been rising since October 2011, when it was 17.

A second report Monday said sales of previously occupied homes are near five-year highs, excluding temporary spikes in 2009 and 2010 when a home-buyer tax credit boosted purchases. Sales rose 2.1 percent in October to a seasonally adjusted annual rate of 4.79 million, the National Association of Realtors said.

Sales are nearly 11 percent higher than they were a year ago, though they remain below the more than 5.5 million that economists says is consistent with a healthy market.

A key factor fueling the gains is a gradually improving economy, which has increased the number of people looking for homes. At the same time, fewer homes are available for sale. The low supply is helping push up prices.

Only 2.14 million homes were available for sale at the end of October, the lowest supply in 10 years. It would take just 5.4 months to exhaust that supply at the current sales pace. That's the lowest sales-to-inventory ratio since 2006.

"We built too many homes during the good years, and we have finally gotten rid of that excess," said Patrick Newport, an economist at IHS Global Insight.

The clearest sign of a better housing market may be the increase in prices. A measure of U.S. prices jumped 5 percent in September compared with a year ago, according to data provider CoreLogic. That was the largest year-over-year increase since July 2006.

Other gauges also have shown solid gains in home prices over the past year.

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