WASHINGTON — Sales of existing homes rose in June to the highest level in a year and a half as buyers tried to beat out rising mortgage interest rates, a real estate trade group reported Monday.
The National Assn. of Realtors said existing single-family homes were sold at a seasonally adjusted annual rate of 3.78 million units last month, a 5.3% increase over May.
It was the fifth consecutive monthly increase and the highest level since homes sold at a rate of 4.06 million units in December, 1986.
In May, sales rose a revised 2% to a rate of 3.59 million units. An earlier estimate had put the gain at 3.1%.
"The anticipation of continued rising interest rates convinced home buyers to get into the market now, rather than waiting," said John A. Tuccillo, the trade group's chief economist.
"But, in fact, rates did not increase as much as anticipated, creating an added incentive for home buyers," he said.
Rates for fixed-rate, 30-year mortgages averaged 10.46% last week, up only about a half of a percentage point from recent lows in March, according to the Federal Home Loan Mortgage Corp. The average does not include add-on fees known as points.
However, many analysts are predicting rates will edge up by another half or full percentage point by the end of the year, curtailing sales.
Topped Year-Ago Pace
"I would not be surprised if July gave us a level perhaps as strong as June, but I think over the remainder of the year, we're going to see those mortgage interest rates move upward and we're going to see housing market activity trailing off as a result," said Richard Peach, an economist with the Mortgage Bankers Assn. of America.
June sales were 5.6% higher than a year ago, the first time in 12 months that the sales pace beat the previous year's mark.
For the first six months, existing homes sold at a seasonally adjusted annual rate of 3.44 million units, up from 3.41 million in the last half of 1987.
There were 3.53 million homes sold for all of last year, down slightly from 3.56 million in 1986, which was the best since 1979. Most economists are expecting sales of about 3.40 million this year.