Existing-Home Sales Hit a Record

Rising mortgage rates pushed many buyers off the fence and into the housing market, sending sales of previously owned homes in July to a record high, according to a report released Monday.

The National Assn. of Realtors said Monday that sales of previously owned homes soared to a seasonally adjusted rate of 6.12 million in July.

The previous record was a rate of 5.94 million, set in December 2002 and matched in January.

Last month’s record rate was a 5% increase from the June rate of 5.83 million.

Economists said lookers were turned into buyers by the increase in mortgage rates.

“When mortgage interest rates first began to rise from record lows, it appears some buyers jumped into the market to take advantage of good affordability conditions before interest rates moved even higher,” said David Lereah, chief economist for the association.

The national average rate for a 30-year conventional, fixed-rate mortgage was 5.63% in July, up from a record low of 5.23% in June, reported mortgage giant Freddie Mac.

Last week, rates on 30-year mortgages rose again -- the seventh increase in the last eight weeks -- to 6.28%.

Most economists say rates on 30-year mortgages, which are more than a full percentage point above their four-decade low, will continue to climb as investors see further indications that the economy is beginning a sustained rebound.

That compelled many home buyers to act quickly to get the best possible rate. July sales of previously owned homes were almost 14% above the 5.38-million pace logged a year ago.

The national median existing-home price -- where half sell for more and half sell for less -- was $182,100 in July, a 4% increase from $175,000 in June, and up 12% from $162,400 a year ago.

“This is the strongest national price increase since November 1980, a reflection of tight inventories in a record market,” Lereah said.

Previously owned homes are the biggest chunk of the housing market.

In the Northeast, sales jumped 7.7% to a rate of 700,000 in July.

In the South, existing-home sales were up 7% to a rate of 2.45 million.

In the Midwest, sales rose 3.9% to a pace of 1.34 million.

In the West, sales climbed 1.9% to a rate of 1.63 million.

Home prices are affordable and the economy is starting to improve, good indicators of a strong real estate market through early next year, said Van Davis, president and chief executive of Century 21 Real Estate Corp.

“People can own for the price of renting, and they’re doing just that,” he said.