Sales of Existing Homes Decline as Prices Rise

Sales of previously owned homes fell in July as some house hunters were put off by galloping prices, but the pace of sales was still the third-highest ever, suggesting the red-hot market wasn’t cooling much.

Data released by the National Assn. of Realtors on Tuesday showed that July sales of existing homes -- single-family houses, town homes and condominiums -- totaled a seasonally adjusted annual rate of 7.16 million units.

That represented a 2.6% decline from June’s record-high pace of 7.35 million units.

Soaring home prices and, to a lesser extent, rising mortgage rates played a role in July’s drop in sales, making it harder for some prospective buyers to make the leap into homeownership, analysts said.

The median sales price of an existing home in July climbed to a record $218,000. That was up 14.1% from a year earlier. The median price is the point at which half of the homes sell for more and half sell for less.

Looking at individual regions, the median price in July compared with a year earlier went up the fastest in the West, by 16%. That was followed by a 13.1% jump in the Northeast, an 11.9% rise in the Midwest and a 7.5% pickup in the South.

By region, sales were down in all parts of the country except for the South, where they were flat, holding at a record annual pace of 2.74 million units.

The share of U.S. borrowers with home loans who are vulnerable to rising interest rates is small and helps mitigate the potential risk to the economy from a slowdown in housing, according to a second report.

The Mortgage Bankers Assn. analysis of the U.S. housing and mortgage markets said about 85% of homeowners either owned their homes outright or held fixed-rate mortgages.

The remaining 15% hold adjustable-rate and nontraditional mortgages. Still, the report said the percentage of borrowers truly vulnerable to an increase in interest rates was probably lower than that.

Of all borrowers with adjustable-rate mortgages, nearly 4% hold what are known as jumbo loans, indicating the mortgage holder has high income. Another group of adjustable-rate mortgage holders have been in their loans for years, and their payment behavior is known, the report said.

Reuters and Associated Press were used in compiling this report.