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Business

US housing recovery boosts economy

Sales, builder sentiment gain

Confidence among US home builders rose in October to its highest level in 6½ years, the latest reports say.

Nam Y. Huh/Associated Press

Confidence among US home builders rose in October to its highest level in 6½ years, the latest reports say.

WASHINGTON — From purchases and prices to builder sentiment and construction, the US housing market is making consistent gains.

The latest evidence came in reports Monday that sales of previously occupied homes rose solidly in October and that builders are more confident than at any other time in 6½ years.

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New home sales and home-price indexes have reached multiyear highs. And Lowe’s Cos. on Monday reported a surge in net income, a sign that home improvement retailers are benefiting.

The housing market’s recovery still has a long way to go. But for now, it’s helping prop up an economy that’s being squeezed by a global slowdown and looming spending cuts and tax increases.

Joseph LaVorgna, an economist at Deutsche Bank, estimates that the housing recovery could boost US economic growth by a full percentage point next year. That’s because a stronger housing market would mean more jobs, especially in industries like construction, and more consumer spending.

‘‘Housing could provide a meaningful — and critical — lift to overall economic activity when other growth drivers, like exports, are slowing,’’ LaVorgna said.

Helping drive the housing rebound is growing confidence among builders. An index of builder sentiment compiled by the National Association of Home Builders/Wells Fargo rose to 46 this month, up from 41 in October. It was the highest reading since May 2006, just before the housing bubble burst. Readings below 50 signal negative sentiment about the housing market. The index last reached that level in April 2006. Still, the index has been rising since October 2011, when it was 17. It has surged 27 points in the past 12 months, the sharpest annual increase on record.

A second report Monday said sales of previously occupied homes are near five-year highs, excluding temporary spikes in 2009 and 2010 when a home buyer tax credit boosted purchases. Sales rose 2.1 percent in October to a seasonally adjusted annual rate of 4.79 million, the National Association of Realtors said.

Sales are nearly 11 percent higher than they were a year ago, though they remain below the more than 5.5 million that economists say is consistent with a healthy market.

The Realtors’ group said Superstorm Sandy delayed some purchases of previously occupied homes in the Northeast. Sales fell 1.7 percent there, the only region to show a drop. Those purchases will likely be completed in coming months, the group said. A key factor fueling the gains is a gradually improving economy, which has increased the number of people looking for homes.

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