- The Washington Times - Monday, August 25, 2003

ASSOCIATED PRESS

Sales of previously owned homes reached a new high in July as fears of rising mortgage rates pushed buyers off the fence and into the market.

The National Association of Realtors said yesterday that sales of previously owned homes rose 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 percent increase over the June rate of 5.83 million.

Economists said that lookers turned into buyers over fears that rising mortgage rates would go even higher.

“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 National Association of Realtors.

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

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

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

That possibility compelled many home buyers to act quickly. July’s sales of previously owned homes was almost 14 percent 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 percent increase from $175,000 in June, and up 12 percent 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,” Mr. Lereah said.

Previously owned homes are the biggest chunk of the housing market. Sales jumped 7.7 percent in the Northeast to a rate of 700,000 in July. In the South, existing-home sales were up 7 percent to a rate of 2.45 million. In the Midwest, sales also rose 3.9 percent to a pace of 1.34 million, and in the West, sales climbed 1.9 percent to a rate of 1.63 million.

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