US existing home sales at two-year high Existing home sales rose in August to a more than two-year high while new single family home construction was at its strongest pace since April 2010, signalling further improvement in the US housing market. The National Association of Realtors said sales of previously owned homes increased 7.8 per cent to an annual rate of 4.82m units in August, from 4.47m the month before. The figure was well above analysts" expectations of a 4.55m rise. It is the largest monthly percentage gain since last August, and the highest rate since May 2010. Existing home sales are 9.3 per cent higher than the 4.41m-unit level of August 2011, a sign of strength in a part of the economy that has struggled for the past six years. Record low mortgage rates and the stabilisation of home prices have given some Americans confidence to go ahead with purchases, even as banks continue to grapple with bad mortgages and a pool of foreclosed properties that remain unsold. The national median existing-home price for all housing types was $187,400 in August, up 9.5 per cent from August last year. The last time there were six back-to-back monthly price increases from a year earlier was from December 2005 to May 2006. The August increase was the strongest since January 2006 when the median price rose 10.2 per cent from a year earlier. The housing market is steadily recovering with consistent increases in both home sales and median prices. More buyers are taking advantage of excellent housing affordability conditions," said Lawrence Yun, NAR chief economist. "The strengthening housing market is occurring even with difficult mortgage qualifying conditions, which is testament to the sizeable stored-up housing demand that accumulated in the past five years," Mr Yun added. Housing supply on the market, at 6.1 months worth at the current sales rate, remains tight and may be holding back sales. Distressed sales - foreclosures and sales of properties at steep discounts - accounted for 22 per cent of the total, the lowest since at least October 2008 when record keeping began. The increased demand for residential property has propelled housing construction, one of the few areas of improvement for the US economy. In a separate data release, numbers showed housing starts overall climbed 2.3 per cent to a 750,000 annual rate from July's downwardly revised 733,000 pace, Commerce Department figures showed on Wednesday. The August number fell below consensus forecasts of 768,000 units, however starts wer up 29 per cent year-on-year. For the latest month, the increase was led by the single-family housing component, which jumped 5.5 per cent, the fastest since April 2010, following a 4.5 per cent decline in July. The multi-family apartment component, however, declined 4.9 per cent in August after a 1.3 per cent gain the month before. However, building permits - a proxy for future construction - eased in August after a moderately healthy July. Permits fell 1 per cent to a 803,000 pace, from a downwardly revised 811,000 in July and slightly below market expectations for 802,000 units. The latest numbers follow positive housing data on Tuesday which showed optimism among US homebuilders climbed in September to the highest level in more than six years. While the housing market is in recovery mode, some analysts" were cautious about the sector's impact on the US economy. The sector is much less important than it used to be. Total residential investment directly accounts for 2.4 per cent of gross domestic product now, down from a 6.3 per cent peak in 2005," said Jim O'Sullivan, chief US economist at High Frequency Economics. Within that, new home construction, the part tracked by housing starts, accounts for 0.9 per cent of GDP now, versus a peak of 3.9 per cent in 2005. A 29 rate of growth in starts thus directly boosts GDP growth by about 0.3 points.