WASHINGTON (AP) - The U.S. housing market is finally on the mend after its most far-reaching collapse in 70 years. That could help rebuild consumer confidence and revive the economy.
For the first time in five years, sales of previously occupied homes rose for the third consecutive month in June, while foreclosure sales and the glut of homes on the market both declined.
The figures, released Thursday by the National Association of Realtors, and a string of rosy corporate earnings reports sparked a rally on Wall Street as the Dow Jones industrials rose above 9,000 for the first time since January.
"People believe that the worst is behind us," said Julie Longtin, a real estate agent with Re/Max Professionals in Providence, R.I., an area that has suffered deeply from record foreclosures of risky loans.
Sales also have risen for three straight months in 40 out of 55 major metropolitan areas tracked by the Associated Press-Re/Max Housing Report, also released Thursday. Prices rose during that period in about half of those areas.
Still, unlike past recessions, the turnaround in the real estate sector is likely to have a muted effect overall. That's largely because homebuilders are expected to keep bulldozers idle as long as they face competition from bargain-priced foreclosures. And it's likely to take at least another year before job losses and foreclosures peak.
The Labor Department said Thursday the number of newly laid-off workers seeking jobless benefits rose 30,000 to a seasonally adjusted 554,000 last week, though the government said its report again was distorted by the timing of auto plant shutdowns.
Unemployment insurance claims have declined steadily since the spring, but most private economists and the Federal Reserve expect jobs to remain scarce and the unemployment rate to top 10 percent by year-end.
"We're not going to see much growth in (home) sales until the labor market turns around," said Patrick Newport, an economist with IHS Global Insight. "People don't move as much when they can't find work."
Analysts said signs that housing market is finally, gradually turning around could help spur demand as buyers become less fearful of losing their shirts.
"It's been the abject pessimism about house prices that has placed a pall over the housing market," said Mark Zandi, chief economist at Moody's Economy.com. "As that psychology reverses itself, things start to work in the opposite direction."
Foreclosures, however, continue to put pressure on home prices. About one out of three homes sold in June was foreclosure-related, down from nearly half earlier this year.