Sales of previously owned U.S. homes climbed more than forecast in July to the fastest pace since November 2009 as more buyers entered the market before further increases in mortgage rates.
Purchases of previously owned houses advanced 6.5% to a 5.39 million annual rate last month, figures from the National Association of Realtors showed today in Washington. The median forecast of 76 economists surveyed by Bloomberg projected a 5.15 million pace. Prices increased 13.7% from a year earlier.
Higher property values that allow more Americans to list their homes, job gains and still-historically low mortgage rates are underpinning demand. At the same time, bigger increases in borrowing costs threaten to slow the pace of improvement in housing, which has been mainstay of economic growth.
“If you look at housing affordability it’s still very attractive,” Ward McCarthy, chief financial economist at Jefferies LLC in New York, said before the report. “The rise in mortgage rates is probably going to start having a little bit of an effect in the fall. I do think we’ll see improvement continue but at a little bit of a slower pace as the year progresses, and frankly that’s probably a healthy sign.”
Estimates of sales in the Bloomberg survey ranged from 4.95 million to 5.5 million after a previously reported 5.08 million pace in June.
Compared with a year earlier, purchases increased 17.2% in July on an adjusted basis, today’s report showed.
The median price of an existing home climbed to $213,500 last month from $187,800 a year earlier.
The number of previously owned homes on the market climbed to 2.28 million in July from 2.16 million a month earlier, according to the report. At the current sales pace, it would take 5.1 months to sell those houses, the same as in June.
The inventory of unsold homes was down from 2.4 million a year earlier.
Higher borrowing costs encouraged more Americans to lock in rates before they head higher. The average rate for a 30-year fixed mortgage climbed to 4.4% in the week ended Aug. 15 from a record low of 3.31% in November, according to Freddie Mac.
“The increases in rates panicked some buyers,” Lawrence Yun, NAR chief economist, said at a news conference today as the figures were released. Higher borrowing costs “generally provide a sense of urgency to close” on home purchases.