Cheap prices 'lift US home sales'

Buyers have been snapping up bargains

US home sales rose last month, as buyers took advance of bargain priced houses that had previously been repossessed, industry data has shown.

Sales of existing homes grew 5.1% in February to an annual rate of 4.72 million, up from January's 4.49 million, the largest jump since 2003.

The average price fell 16% from a year earlier to $165,000 (£114,000), added the National Association of Realtors.

This was the second largest fall on record, said the estate agent body.

'Distressed homes'

Lawrence Yun, the organisation's chief executive said first-time buyers made up half of all existing home sales last month.

"Because entry-level buyers are shopping for bargains, distressed sales accounted for 40 to 45% of transactions in February," he said.

"Our analysis shows that distressed homes typically are selling for 20% less than the normal market price, and this naturally is drawing down the overall median price."

Last week the Commerce Department said US home construction soared 22% in February, from a year earlier, to a seasonally adjusted 583,000.

This was the first rise in seven months.