Pace of U.S. existing home sales fastest in 2 years

WASHINGTON (Reuters) - Sales of previously owned U.S. homes jumped 7.2 percent in July to mark the fastest sales pace in nearly two years, an industry survey showed on Friday, in a strong sign that housing is pulling out of a three-year slump.

Sales in July rose for the fourth straight month to hit an annual rate of 5.24 million units, the highest rate since August 2007, the National Association of Realtors said, beating market expectations for a 5 million unit pace. Sales in June had been at a 4.89 million pace.

July's increase was the largest monthly gain since the series started in 1999. The last time sales rose for four consecutive months was in June 2004, the NAR said.

The Realtors group heralded the July sales as a turning point, while some observers offered a more cautious view.

"The housing market has decisively turned for the better. We are bouncing back," NAR chief economist Lawrence Yun told reporters.

"Overall, these figures may suggest that the recovery in housing activity is gathering pace, but there is a long way to go yet," said Paul Dales, U.S. economist at Capital Economics in Toronto.

U.S. stock indexes rallied on the data, with the Dow Jones industrial average up 1.5 percent in mid-morning, and home builders posted hefty gains. Pulte Homes Inc was up 3.5 percent, while D.R. Horton Inc gained 4.3 percent.

Luxury home builder Toll Brothers Inc was up 3.3 percent. A broader measure of home construction stocks was up 3.4 percent to 293.28 after the housing data.

Treasury debt prices fell as investors viewed the data as another indication that the recession that started in 2007 was close to an end, if not over.

U.S. Federal Reserve Chairman Ben Bernanke, speaking at a gathering of central bankers and top economists in Jackson Hole, Wyoming, said prospects for a resumption in global economic growth after a deep contraction looked good "in the near term.

MULTI-FAMILY DWELLINGS LEAD SALES GAINS

Compared to July last year, sales rose 5.0 percent. The improvement in sales in July was broad based with single-family home sales rising 6.5 percent to an annual rate of 4.61 million units and multi-family dwellings surging 12.5 percent to a 630,000 unit rate.

Still, high unemployment threatens the budding recovery as many homeowners continue to lose their properties, and some economists question the sustainability of the economic recovery many see taking root.

A report from the Mortgage Bankers Association on Thursday showed late home loan payments jumped to a record high in the second quarter, with almost one in eight homeowners delinquent or in the process of foreclosure.

The inventory of existing homes for sale in July rose 7.3 percent to 4.09 million units from the previous month, NAR said. At July's sales pace, that represented a 9.4 months' supply, the same as in June.

The national median home price was $178,400 in July, down 15.1 percent from the same period last year, weighed down by distressed sales as they typically sell for 15 to 20 percent less than traditional homes.

(Additional reporting by Nick Zieminski in New York; editing by Leslie Adler)