U.S. July existing home sales rose 5.0 pct

Fyi...

Totally expected in view of the rush to close ahead of rising mortgage rates and the indifference of the market appears to agree. These next two months' figures will be the important ones.

Do you think figures will weaken in the next couple of months?

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U.S. July Existing Home Sales Rise to 6.12 Mln Rate (Update1)

Aug. 25 (Bloomberg) -- U.S. sales of previously owned homes rose to a record in July, fueled by interest rates that stayed close to historic lows, an industry report showed.

Home resales totaled 6.12 million at an annual pace during the month, up 5 percent from June's 5.83 million rate and the third increase in the last four months, the National Association of Realtors said. The group forecasts sales will probably reach 5.73 million for the year, surpassing the record 5.57 million sold in 2002.

Mortgage rates that have increased about a percentage point since reaching a record low in June have yet to dissuade buyers, economists said. Home buying, which spurs purchases of related items such as furniture and appliances, may not get much stronger.

``It's most probably the peak in housing that we will observe,'' said David Lereah, the Washington-based group's chief economist. Because of rising mortgage rates, sales should slow between 4 percent to 5 percent later this year.

Economists surveyed by Bloomberg News had expected home resales to rise to a 5.9 million-unit annual pace from June's previously reported 5.83 million rate.

Resales rose 7.7 percent in the Northeast to a 700,000-unit pace, 3.9 percent in the Midwest to a rate of 1.34 million units, 7 percent in the South to a 2.45 million unit pace and 1.9 percent in the West to a 1.63 million-unit rate.

The supply of homes available for sale, another gauge of housing demand, fell to 4.7 months' worth in July from 5.1 months' worth the previous month.

Price Surge

The median price of a home rose 4.1 percent to $182,100 last month from $175,000 in June. The price is 12.1 percent higher than the same month last year. That's the biggest one-month increase since November 1980.

Lereah said he expects home price appreciation to slow to 4 percent to 5 percent over the next 12 months.

The average rate on a 30-year fixed rate mortgage reached 5.94 percent in July after falling in June to 5.21 percent, the lowest since Freddie Mac started keeping records in 1971. Freddie Mac is the second-largest source of mortgage financing. The lowest recorded 30-year rate was 5.83 percent in 1965, according to the Federal Housing Finance Board, which has figures back to 1963.

Buying Decisions

Existing home sales are typically counted when transactions close, meaning the July statistics likely reflected buying decisions made a month or two earlier. New home sales are counted when buyers sign contracts with builders.

Previously owned homes account for 85 percent of the residential real estate market and new homes the remainder. The Commerce Department will report new home sales figures tomorrow at 10 a.m. Washington time.

The strength of housing earlier in recent months suggests this year will be the strongest ever recorded for the industry. A total of 5.65 million previously owned single-family homes will be resold this year, surpassing last year's record 5.57 million, according to forecast from the National Association of Realtors.

While the rise in interest rates has yet to curb home sales, it may begin to have more bite in coming months. Mortgage rates are typically pegged to long-term securities such as 10-year Treasury notes, whose yields have risen because investors predict higher inflation might return as the U.S. economy strengthens.

``Housing has been the most robust sector of the economy,'' said Steven Wood, principal economist at Insight Economics in Walnut Creek, California. ``Although rising interest rates may initially stimulate sales, ultimately they will dampen the housing market.''

The monthly mortgage payment on a $100,000 home with a 30- year fixed rate currently around 6.28 percent is $617.67. The compares with $549.73 a month when the rate was a record-low 5.21 percent in June.

Last Updated: August 25, 2003 10:14 EDT

Almost surely. The refi index has already plunged from a sensational 9977.8 in May to an underwhelming 2756.8 two weeks ago and will be negligible by the end of this quarter. While the downturn won't be even remotely as deep, applications for new mortgages have also been dipping this past month and it won't be long before that shows up in the housing sales figure.

Totally expected in view of the rush to close ahead of rising mortgage rates and the indifference of the market appears to agree. These next two months' figures will be the important ones.

Agreed.

They were down -.3 in June, up .9 in May, up higher still April-March, wish I'd been posting and archiving these reports as well all along...