Existing Homes Last Hurrah?

By John S. McClenahen Logic would say that with mortgage interest rates rising sales of existing homes should start to taper off. But it sure didn't happen in July. Existing home sales were at a record seasonally adjusted annual rate of 6.12 million units last month, 5% higher than June's 5.83 million-unit pace and well above the consensus forecast of 5.92 million units for July, reports the National Association of Realtors (NAR), Chicago. The previous monthly sales record was the 5.94 million rate recorded in both December 2002 and January 2003. Rising interest rates -- they're up about one percentage point from their earlier lows -- actually may have stimulated purchases of existing homes in July, says NAR chief economist David Lereah. "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," he relates. "However, given the strong underlying demand for housing from a growing number of households, it's hard to gauge just how much 'fence jumping' may have accounted for the sales record."

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