U.S. home sales soared to their highest level ever in June, buoyed by rising incomes and home values, and a belief among consumers that, despite rising mortgage rates, now is a good time to buy a home.
According to the latest figures from the National Association of Realtors, existing home sales surged 10.6% in June to an annualized rate of 5.5 million, reversing the 4.8% drop recorded in May, and keeping the industry on target to reach the NAR's estimate that 5.2 million homes will be sold in 1999 - which would be a fourth consecutive record.
The surge comes as mortgage rates continue on their upward climb. The average rate on a fixed 30-year mortgage today is more than 7.5%, up from 7.15% in May and 6.92% in April.
That steady march upward might explain the surge in home sales for June, some analysts have suggested, as buyers try to lock in a loan before rates climb further. But other factors are likely at work as well, observers noted, including high consumer confidence, low unemployment and low inflation.
The NAR numbers are additional proof that 1999 is shaping up to be a strong year for home sales. Earlier this month, Freddie Mac said it expected sales of new and existing homes to reach record levels, even as mortgage rates continue rising. Freddie Mac officials expect 1999 home sales to advance to 6.01 million units, and largely hold steady in 2000, even as rates hover around 7.5%.
But the sales didn't occur without a price. According to the NAR, the ratio of homes for sale dwindled to 4.7 months in June from 5.5 months in May, the lowest since December 1994, when the ratio was 4.1 months. - JS