Sales of previously owned U.S. homes rose in July, as more inventory hit the market and an increase in mortgage interest rates likely motivated buyers.
Sales were up 6.5% from the prior month and 17.2% from the same month a year earlier. Homes sold at a seasonally adjusted annual rate of 5.39 million units last month, the National Assn. of Realtors reported Wednesday.
The chief economist of the group, Lawrence Yun, said in a news release that in the short-term, sales will jump as people fear getting priced out of the market. But more people will be priced out of the market as the increase in mortgage financing drives down the number of eligible buyers, he said.
"Mortgage interest rates are at the highest level in two years, pushing some buyers off the sidelines," Yun said. "The initial rise in interest rates provided strong incentive for closing deals. However, further rate increases will diminish the pool of eligible buyers."
Housing inventory rose 5.6% last month to total 2.28 million homes available for sale, representing about a five-month supply at the current sales pace. Economists typically consider six months of supply to be a balanced market.
The national median home price was $213,500 last month. That was a slight slip from the $214,200 median in June, but up 13.7% from July 2012. It was the 17th consecutive month of year-over-year price increases. The median is now just 7.3% below the all-time record of $230,400 in July 2006.
Sales of foreclosed homes and short sales made up just 15% of the market last month, down from 24% in July 2012.