Washington: Sales of previously owned homes climbed in June to an eight-month high, a sign the housing market is making more headway.

Sales increased 2.6 per cent to a 5.04 million annual rate last month, led by gains in all four US regions, figures from the National Association of Realtors showed on Tuesday in Washington. The median forecast of 78 economists surveyed by Bloomberg projected sales would rise to a 4.99 million rate. Prices advanced at the slowest pace since March 2012.

Historically low interest rates and smaller price increases are helping bring home ownership within reach for more Americans. A pick-up in employment opportunities that lead to faster wage growth would provide an added spark for a residential real-estate market that began to soften in the middle of 2013.

“Fundamentally, things are still on a pretty good footing,” Omair Sharif, a US economist at RBS Securities Inc in Stamford, Connecticut, said before the report. “Job growth has accelerated, and that’s going to be a positive for housing demand.”

Estimates in the Bloomberg survey of economists ranged from a sales pace of 4.8 million to 5.11 million after May’s previously reported 4.89 million.

Another report on Tuesday showed the cost of living rose in June, paced by a jump in gasoline that is now reversing. The consumer price index increased 0.3 per cent after a 0.4 per cent gain the prior month, figures from the Labour Department showed on Tuesday in Washington. The core measure, which excludes volatile food and fuel costs, rose 0.1 per cent, less than projected.

Compared with a year earlier, purchases decreased 2.3 per cent in June on an adjusted basis, Tuesday’s report showed.

The median price of an existing home increased 4.3 per cent to $223,300 (Dh820,203) in June from $214,000 a year before.

The number of existing properties on the market rose 6.5 per cent to 2.3 million in June from a month earlier. At the current pace, it would take 5.5 months to sell those houses, the same as in May. The inventory of unsold homes was up from 2.6 million a year earlier.

The median time a home was on the market decreased in June to 44 days from 47 days in the prior month.

‘Flying very fast’

“Things are flying very fast,” Lawrence Yun, NAR chief economist, said at a news conference on Tuesday as the figures were released. Sales have seen a “nice jump in the last three months but it is underperforming in my view” compared with the fundamentals, he said.

The existing home-sales advance was led by a 6.2 per cent gain in the Midwest, followed by a 3.2 per cent increase in the Northeast. Purchases rose 2.7 per cent in the West and 0.5 per cent in the South.

Purchases of single-family homes increased 2.5 per cent to an annual rate of 4.43 million, the report showed. The sales pace of multifamily properties including condominiums climbed 3.4 per cent to 610,000 in June, also the highest since October.

Cash transactions accounted for about 32 per cent of all purchases in June, according to the report. Investors made up 16 per cent of purchases.

Sales of distressed property, including foreclosures, accounted for 11 per cent of the total last month, matching the lowest share since October 2008.

First-time buyers accounted for 28 per cent of all purchases in June, up from 27 per cent a month earlier.

Existing-home sales, which are tabulated when a purchase contract closes, are recovering from a 13-year low of 4.11 million in 2008 after reaching a record 7.08 million in 2005. They climbed to 5.09 million for all of 2013.

The housing market continues to face hurdles to its recovery — from shortages in construction and labour to mortgage rates that remain elevated compared with early 2013.

The pace of home construction slumped 9.3 per cent to an 893,000 annualised rate from a 985,000 pace in May that was weaker than initially estimated, figures from the Commerce Department showed last week.

The average rate for a 30-year fixed mortgage was 4.13 per cent in the week ended July 17, according to Freddie Mac in McLean, Virginia. While down from 4.53 per cent at the start of the year, it’s higher than the 3.35 per cent in May 2013.

At the same time, home builders are optimistic the market. A report last week showed confidence among home builders rose in July to the highest level in six months. The National Association of Home Builders/Wells Fargo sentiment measure climbed to 53 from 49 in June, the Washington-based group reported. Readings above 50 mean more respondents said conditions were “good.”