Yun said that bigger increases in rates will “reduce the pool of eligible homebuyers” and the average 30-year mortgage may reach 5% by year-end.
Existing-home purchases are recovering from a 13-year low of 4.11 million reached in 2008. Annual sales peaked at 7.08 million three years earlier. A total of 4.66 million previously- owned houses were sold in 2012.
The Realtors group projects 5.05 million home sales this year, and Yun said that figure may soon be revised higher.
Sales climbed in all four U.S. regions, with the biggest gain in the Northeast.
Supply constraints, rising home prices and an improved labor market have benefited homebuilders, whose confidence climbed this month to the highest level since November 2005. A Commerce Department report last week showed housing starts advanced in July, paced by a rebound in construction of multifamily projects. Building permits also rose, signaling construction will keep rising.
Higher borrowing costs may be seeping into consumer confidence. A preliminary sentiment index from Thomson Reuters/University of Michigan fell in August to 80 from a six- year high of 85.1 a month earlier.
The index on home-buying conditions dropped this month to the lowest level since February, Daniel Silver at JPMorgan Chase & Co. in New York, who had access to the data, said in an Aug. 16 research note.
Work began on 2.2% fewer single-family homes last month, with starts falling to a 591,000 annualized rate, the slowest since November, Commerce Department data showed last week.
Investors in July accounted for 16% of all existing- home sales, down from a peak of 22% in February, according to Yun.
The pickup in borrowing costs may start to work to the advantage of some home-buyers, who have been competing with investors during the housing rebound, Spencer Rascoff, chief executive officer of Zillow Inc., said on an Aug. 6 conference call. Zillow, the operator of the largest U.S. real-estate website, reported sales jumped 69% in the second quarter from a year earlier, topping the average estimate of nine analysts.
“What’s happening is investor buyers, cash buyers are moving out of the market, or they’re becoming a smaller portion of the market as mortgage rates rise,” Rascoff said. “So on some level, there’s actually something of a benefit of rising interest rates kind of getting cash buyers,” out of the market and helping traditional home-buyers win offers.
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