Washington: Sales of previously owned US homes rose in August to the highest in more than a year amid lower borrowing costs and sustained income gains, adding to signs the housing market is breaking out of a slump.

Contract closings rose 1.3% from the prior month to a 5.49 million annual rate, the fastest pace since March 2018, the National Association of Realtors said Thursday. That exceeded all forecasts in a Bloomberg survey of economists, whose median projection was 5.38 million. The median sales price rose 4.7% from a year earlier — the second-fastest gain in the past year — to $278,200.

The figures follow data out Wednesday showing solid housing construction and a Thursday report on jobless claims that indicated the nation’s labour market remains solid. The S&P 500 Index extended gains after the existing-home sales report and the Federal Reserve’s decision on Wednesday to reduce its key lending rate.

Key Insights

Official’s view

The data show the market may have “just turned a corner for consistent gains in the upcoming months, particularly given that we are essentially at historically low mortgage rates,” Lawrence Yun, NAR’s chief economist, said at a briefing in Washington.

Yun reiterated concern about inventories, which were down 2.6% from a year earlier. “We need more supply,” he said, adding that “if we can get more homebuilding, it will be a good outcome on many fronts.”