Sales of existing single-family homes increased a modest 1.1% in August to the second-highest level of the year as buyers tried to close purchases before interest rates rose further, a real estate trade group said Monday.
The National Assn. of Realtors said sales of existing homes rose to a seasonally adjusted annual rate of 3.67 million units last month, after a sharp 5% decline in July. Except for the 3.82-million rate in June, the August pace was the fastest in 15 months.
John Savacool, an economist with the WEFA Group, a Bala-Cynwyd, Pa., forecasting firm, said buyers completing sales in August probably began looking for homes in May and June.
"That was just after rates started rising," he said. The increase "was a mild panic response to rising rates."
Fixed-rate mortgages dipped below 10% in February and March and have since risen to about 10.5% as the Federal Reserve fought inflation through higher interest rates. Many economists expect rates to top 11% by early next year.
"Basically, what we're seeing here is the movement of households into the market now to avoid what they perceive to be deteriorating conditions. This has persisted through the summer," said John A. Tuccillo, chief economist of the real estate association.
He predicted that sales will decline the rest of the year, bringing them for all 1988 to 3.45 million units, a 2.1% decline from 1987.
After hitting a low of 1.99 million units in the recession year of 1982, resales climbed to a record high of 3.56 million units in 1986.
All of the strength in August came in the South, where sales rose 4.4% to an annual rate of 1.42 million units, rebounding from a 4.2% decline in July.
In the Northeast, sales fell 2.9% to a 670,000-unit rate, after a 6.8% decline in July.
Sales were unchanged in the Midwest and West, at 910,000 units and 650,000 units, respectively.
The median price of a home rose from July to August by $600 to $91,300, up 5.5% from a year ago, when the median sales price for an existing home was $86,500.
The Northeast remained the costliest region of the country, with a median sales price of $144,800 last month, up 6.7% from a year ago. It was followed by a median price of $122,000 in the West, up 6% from a year ago; $84,300 in the South, up 4.3%, and $70,500 in the Midwest, up 6%.