Existing home sales rebounded in July after declining in the previous month as buyers sought to take advantage of the low interest rates. The housing market seems to be gathering strength from the positive economic momentum and record low unemployment rate.
Sales of previously owned houses increased a seasonally adjusted 2.5% to 5.42 million units in July, the highest in the last five months. The growth rate also exceeded economists’ forecast. In June, sales were slightly down. On a year-over-year basis, total sales were up 0.6% in July.
Data published by the National Association of Realtors, the largest trade association in America, Wednesday showed that Midwest, South, and West witnessed an increase in activity, while Northeast registered a decline.
“Falling mortgage rates are improving housing affordability and nudging buyers into the market. The shortage of lower-priced homes has markedly pushed up home prices,” said Lawrence Yun, chief economist at the National Association of Realtors, adding that the supply of affordable homes was inadequate during the month, which prompted sellers to convert some new apartments into condominiums.
There was a 4.3% rise in the average price of existing homes to $280,800, continuing the uptrend that began nearly seven-and-half years ago. At the end of July, there were 1.89 million residential properties available for sale, down 2% month-on-month. First-time buyers accounted for about 32% of the total sales, which is slightly below the preceding month’s level.
Statistics indicate that in addition to favorable interest rates and strong labor market, improved confidence among home-buyers, primarily about the health of the economy, contributed to the growth.
There has been an uptick in activity in the real estate sector ever since the Federal Reserve adopted a dovish stance with regard to its monetary policy. After the central bank slashed the key interest rate by 25 basis points to 2.25% last month – for the first time since the economic crisis – there has been speculation that it might go for more cuts at the upcoming policy meetings.