US existing home sales climb to 8-month high

Sales of US previously owned homes unexpectedly climbed in January to the highest level in eight months as investors used all-cash transactions to snap up distressed properties.

Purchases increased 2.7 per cent to a 5.36 million annual rate, figures from the National Association of Realtors showed today in Washington. The share represented by foreclosures and short sales rose to a 12-month high, pushing the median price to the lowest level in almost nine years.

Affluent investors may continue taking a bigger share of the market as credit restrictions and 9 per cent unemployment keep first-time buyers at bay. A pickup in job growth is needed to ensure more Americans will be in a position to consider home ownership.

“It is really a foreclosure-driven market,” said Ethan Harris, head of developed markets at Bank of America Merrill Lynch Global Research in New York, who projected sales would increase to a 5.38 million rate.