NEW YORK (TheStreet) -- The recovery in the housing market is now defying expectations. So is Janet Yellen doing a quick rewrite of Friday's speech?

Existing-home sales increased last month to their highest annual pace of the year, rising 2.4% to a seasonally adjusted annual rate of 5.15 million from a slight downwardly-revised 5.03 million in June, according to the National Association of Realtors (NAR). Sales have now risen for four consecutive months, yet still remain 4.3% below the 5.38 million-unit level from last July, which was the peak of 2013.

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"The number of houses for sale is higher than a year ago and tamer price increases are giving prospective buyers less hesitation about entering the market," said Lawrence Yun, NAR's chief economist. "More people are buying homes compared to earlier in the year and this trend should continue with interest rates remaining low and apartment rents on the rise."

The better-than-expected July home sales number comes in the wake of this week's surprisingly strong monthly housing starts figure. The Commerce Department reported Tuesday that U.S. home construction rose 15.7% in July to a seasonally adjusted annual rate of 1.09 million homes. That's the fastest pace in eight months and follows declines of 4% in June and 7.4% in May. Applications for building permits also showed strength in July after back-to-back monthly declines, advancing 8.1% to an annual rate of 1.05 million.

Considering the fact that no sector of the economy took a harder hit in the Great Recession than housing with new home starts plummeting 75% in 2009, there is little wonder why economists are cheering - and scrutinizing - the turnaround.

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