WASHINGTON (

TheStreet

) -- Following earlier signals that a recovery in housing could well be in progress, the National Association of Realtors said Friday that existing-home sales grew for the fourth month in a row.

The industry group said home sales jumped by a surprising 7.2% in July to a seasonally adjusted rate of 5.24 million units, the highest level in two years and the biggest monthly sales increase since record-keeping began a decade ago. Economists polled by Thomson Reuters expected the group to show a mere 2.2% jump.

The surge came after the group reported a 3.6% rise to 4.89 million units in the prior month.

"The housing market has decisively turned for the better," NAR chief economist Lawrence Yun said in a statement.

"Because price-to-income ratios have fallen below historical trends, there are more all-cash offers. In some recovering markets like San Diego, Las Vegas, Phoenix, and Orlando, the demand for foreclosed and lower priced homes has spiked, and a lack of inventory is becoming a common complaint," Yun later added.

The median home price in July was $178,400, down 15% from July of last year, while total housing inventory grew by 7.3% in July.

Housing stocks gained ground Friday after the announcement. Shares of

Toll Brothers

(TOL) - Get Report

,

KB Home

(KBH) - Get Report

and

Lennar

(LEN) - Get Report

were rising 3.3%, 4.3% and 3.5% each.

Pulte

(PHM) - Get Report

was trading at $12.76, adding 37 cents, and

Ryland

(RYL)

was changing hands at $23.40, up $1.24.

Home-improvement oultets

Home Depot

(HD) - Get Report

and

Lowe's

(LOW) - Get Report

advanced as well, up 1.9% and 2.3%, respectively.

-- Reported by Sung Moss in New York

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