Home Buying Jumps as Borrowing Costs Drop

Cheaper borrowing costs encouraged Americans to snap up existing homes in August, giving sales their biggest boost in 14 months. The National Assn. of Realtors reported that sales of previously occupied homes shot up by a surprising 9.3% last month to a seasonally adjusted annual rate of 5.27 million. In August, the average interest rate on a fixed-rate 30-year mortgage was 8.03%, down from 8.15% in July. Many analysts had expected sales to increase by around 4.4% in August. In California, the median price of a home rose to a record $255,580 during August as interest rates declined and the supply of available homes continued to dwindle, the California Assn. of Realtors said. August’s median easily surpassed the previous record of $244,000 set in June. The price was 14% higher than the August 1999 median of $224,200, marking the 42nd consecutive month in which prices have increased over the same month of the previous year.