Existing-home sales surge to record high : usatoday.com
WASHINGTON (Bloomberg) - U.S. home resales in June rose to the
highest level ever recorded, as abundant jobs and rising incomes fueled
buyer confidence even amid higher interest rates, industry figures showed
Monday.
Resales rose 10.6% last month to an all-time high annual rate of 5.53
million, the National Association of Realtors said Monday. Analysts had
expected a 0.8% rise in resales to a 5.08 million rate. June also marked
the eighth month in a row that resales topped 5 million - surpassing last
year's record 4.97 million sales.
"Real estate markets across the country are still very hot," said David
Greenlaw, an economist at Morgan Stanley Dean Witter in New York,
before the report was released.
Moreover, the rise in resales "suggests that the higher mortgage rates
haven't had a significant impact" on home buying, said Scott Brown, an
economist at Raymond James & Associates in St. Petersburg, Fla., before
the report.
The sales numbers are based on closings, which typically occur 30 to 60
days after a buyer signs a contract for a home. That means sales typically
reflect changes in mortgage rates that occurred in the month or two before
the report.
In April, the average 30-year mortgage rate was 6.92%, down from
7.04% in March, according to average weekly statistics compiled by
Freddie Mac. The average rate rose to 7.15% in May and was at 7.52%
last week.
In May, home resales fell a revised 4.8% to a 5-million-unit annual rate,
association figures showed, originally reported as a 4.0% decrease to a
5.04 million annual pace. Previously owned houses account for 85% of all
homes on the market.
Rising interest rates promise to be a continuing factor in the market.
Congressional testimony last week from Fed Chairman Alan Greenspan
has heightened investor concern Federal Reserve policymakers will raise
the key target interest rate, the overnight bank lending rate. The question is
when.
"If new data suggest it is likely that the pace of cost and price increases
will be picking up, the Federal Reserve will have to act promptly and
forcefully," Greenspan told Congress in the Humphrey-Hawkins report he
must give twice a year on the economy and Fed policy.
The Fed's Open Market Committee at its last meeting June 30 raised the
overnight bank lending rate by a quarter point to 5%. The next meeting is
Aug. 24.
At least two-thirds of Wall Street's biggest bond firms don't see the Fed
raising interest rates at that session, according to a Bloomberg News
survey. Dealers were divided about what they expect at the subsequent
meeting on Oct. 5, with 13 forecasting no change in rates, 13 expecting an
increase and three undecided.
Freddie Mac, the nation's No. 2 mortgage financier, said it expects sales
of new and previously owned houses to again set records in 1999 even if
mortgage rates stay above 7%.
Home sales will total 6.01 million units this year and are likely to stay close
to that level in 2000, according to estimates by Freddie Mac. The total
includes about 900,000 new and 5.11 million existing homes. |
