WASHINGTON—Sales of previously owned U.S. homes picked up in July, suggesting that lower mortgage rates are beginning to drive sales after a weak spring selling season.
Existing-home sales rose 2.5% in July from the previous month to a seasonally adjusted annual rate of 5.42 million, the National Association of Realtors said Wednesday. Economists surveyed by The Wall Street Journal had expected sales to rise 2.3% last month.
Compared with a year earlier, sales in July rose 0.6%, the first increase after a streak of 16 consecutive months of year-over-year declines.
Lawrence Yun, the trade group’s chief economist, said July’s uptick was an “inevitable realization given incredibly low mortgage rates,” alongside strong job conditions.
June’s sales were revised higher, to a 5.29 million annual rate from an earlier estimate of 5.27 million. That capped a weak spring selling season overall. The spring is crucial to the housing market because roughly 40% of the year’s sales take place in March through June.
Still, the housing market’s slight pickup last month is a positive sign for the sector, which has struggled this year despite some favorable conditions for potential buyers.
Mortgage rates have been dropping steadily in recent months. The average interest rate on a 30-year fixed-rate mortgage in July was 3.77%, down from 4.46% six months earlier, according to Freddie Mac.
A shortage of homes for sale in some areas means home prices remain high. The median sale price for an existing home in July was $280,800, up 4.3% from a year earlier. There was a 4.2-supply of homes on the market at the end of July, based on the current sales pace.
For the second half of the year, low inventory remains a challenge for the market, Mr. Yun said.
“The job market still remains strong but there is increasing economic uncertainty,” he said, adding “people may be hesitant to buy a home if they think we may be facing an economic recession.”
Purchases of previously owned homes account for the bulk of U.S. homebuying. The Commerce Department last week reported that home building fell in July for the third straight month. Housing starts, a measure of new-home construction, fell 4% in July from the prior month to a seasonally adjusted annual rate of 1.191 million.
News Corp., owner of The Wall Street Journal, also operates Realtor.com under license from the National Association of Realtors.
Source: Real Estate News and Advice – realtor.com » Real Estate News