WASHINGTON (AP) -- Existing home sales jumped 7.8% in August to the highest level in more than two years, the National Association of Realtors said Wednesday.
U.S. sales of previously occupied homes rose to a seasonally adjusted annual rate of 4.82 million. That's the most since May 2010, when sales were fueled by a federal home-buying tax credit.
The figures were reported the same day the government said U.S. homebuilders broke ground on more new homes in August compared to July.
The gains in home sales and home building suggest the housing recovery finally may be gaining strength.
Still, the recovery is from a depressed level. Sales of previously occupied homes remain below the more than 5.5 million that economists consider consistent with a healthy market. And the number of first-time homebuyers, who are critical to a housing rebound, slipped to 31% from 34%.
On the home building front, the Commerce Department said Wednesday that construction of homes and apartments rose 2.3% to a seasonally adjusted annual rate of 750,000 last month.
Single-family housing starts rose 5.5% to an annual rate of 535,000 homes, the best pace since April 2010. Apartment construction, which can be volatile from month to month, fell 4.9%.
Applications for building permits, which are a good sign of future construction, fell to an annual rate of 803,000. Still that's down from a four-year high reached in July.
Though new homes represent less than 20% of the housing sales market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to the NAHB's data.
As for home sales, more Americans appear to be taking advantage of near-record low mortgage rates and prices that are, on average, much lower than they were six years ago.
Sales might be higher if more homes were available, the Realtors' group said. The limited supply is helping to lift prices. There were 2.47 million homes available for sale in August. It would take just over six months to exhaust that supply at the current sales pace. That's the typical pace in a healthy market.
Wednesday's positive reports follow other signs that there is a sustained recovery in housing under way. Home prices are rising steadily nationwide. Sales of new homes are also picking up. And home builders are more confident and are breaking ground on more new homes.
Sales of both new and previously occupied homes are running ahead of last year. Home prices are increasing more consistently, in part because the supply of homes has shrunk and foreclosures have eased. And mortgage rates remain near record lows, a strong enticement for potential buyers with good credit.
The economy will likely benefit if home prices continue to rise. When that happens, Americans typically feel wealthier and boost consumer spending, which drives 70% of growth.
Even with the gains, the housing market remains weak. Many would-be buyers are having difficulty qualifying for loans or can't afford the larger down payments being required by banks.
The rate of construction has risen nearly 60% since hitting a recession low of 478,000 in April 2009. Yet it's half the pace considered healthy. Still, the steady gains suggest the housing recovery could endure.Confidence among builders rose in September to the highest level in more than six years, according to a survey released Tuesday by the National Association of Home Builders/Wells Fargo. And builders are more confident that sales will improve over the next six months, the survey noted.
The Federal Reserve last week announced new stimulus measures intended to keep mortgage rates low for the next few years.
Fed Chairman Ben Bernanke said the bank would purchase $40 billion of mortgage-backed securities each month until the job market improves "substantially." That could push down longer-term interest rates and spur more borrowing and spending.
The Fed also hopes that lower mortgage rates will accelerate the housing market recovery and boost home prices. That, in turn, could make people feel wealthier and more willing to spend, which would bolster economic growth.