US home sales climb as mortgage rates plunge
Low mortgage rates helped boost existing-home sales in July, including “vast growth” in the West, according to the National Association of Realtors.
Sales of single-family homes, townhomes, condominiums and co-ops rose 2.5 percent after a slump in June to a seasonally adjusted annual rate of 5.42 million, according to the association. Overall sales were up 0.6 percent from a year earlier.
The rise in home sales came as the average 30-year fixed mortgage rate has fallen more recently to 3.6 percent, the lowest it’s been since November 2016, according to mortgage buyer Freddie Mac.
“Falling mortgage rates are improving housing affordability and nudging buyers into the market,” said Lawrence Yun, chief economist at the National Association of Realtors.
Prices have also been rising, according to the association. The median existing-home price in July was $280,000, up 4.3 percent from July 2018. This was the 89th consecutive month of year-over-year gains.
Yun said the supply of affordable housing is severely low, which has been affecting prices. Total housing inventory was down 1.6 percent compared to a year ago.
“The shortage of lower-priced homes have markedly pushed up home prices,” he said.
The West saw the largest regional increase as existing-home sales rose 8.3 percent in July. The median price was also up 3.7 percent compared to last year at $408,000.
The Midwest and South saw smaller increases, while the Northeast saw a decrease of 2.9 percent.
With even lower mortgage rates in August, will the rise in home sales keep up? Yun said mortgage rates are an important factor for consumers, but so is “confidence about the nation’s overall economic outlook.”
“Home buying is a serious long-term decision and current low or even lower future mortgage rates may not in themselves meaningfully boost sales unless accompanied by improved consumer confidence,” he said.