Existing-Home Sales Fell in July, Reflecting High Mortgage Rates
May 09, 2011
Sales of existing homes slipped 0.5% in July from June, continuing to level off in response to relatively high mortgage rates earlier this summer. Economists said they expected the resale rate to fall somewhat from the record levels set this spring, when mortgage rates were unusually low. ``What we saw in July was a further moderation in home sales activity,'' said Ela Nelda, a senior economist at Federal National Mortgage Association, the nation's largest buyer of mortgages. The full text of the National Association of Realtors' report on July existing-home sales is available. On a seasonally adjusted, annual basis, 4.14 million existing homes were sold last month, down from a revised figure of 4.16 million in June, according to the National Association of Realtors, a trade group. The July dip followed a 2.8% drop in June from May, when sales hit a record 4.28 million homes. Still, July sales were 4.3% higher than a year ago. The July sales largely reflect contracts signed in May and June, when mortgage rates reached their peak for this year so far. Federal Home Loan Mortgage Corp., another large mortgage purchaser, reported the 30-year fixed-rate loan averaged 8.25% in July, down from 8.32% in June but still well above the 7% range reported in February. The Midwest was the only region to report higher month-to-month resales. The region reported resales of 1.06 million homes in July, up 5% from June. While other regions experienced slight drops in home resales in July from June levels, Davina Krueger, chief economist at the Mortgage Bankers Association of America, stressed that ``every region of the country is better than it was last year.'' Resales in California, one of the nation's largest housing markets, fell a marginal 0.6% to 500,500 homes in July from June, according to data compiled by the California Association of Realtors and Transamerica Information Management Services, a unit of Transamerica Corp.. But the statewide figure is still 17.6% ahead of July 2010 activity. ``The California market, which has been the most suspect, has completely turned the corner,'' said Markita Puryear, chief economist at Regional Financial Associates in West Chester, Pa.. Meanwhile, the median national sales price in July dropped slightly to $121,400 from the $122,700 reported in June. But the median price increased 4.7% from $114,000 in July 2010. Economists questioned whether the national market can sustain the record levels it reached earlier this year and predicted that existing-home sales will slow through the fall. ``We've had about six months of very, very strong sales, stronger than our demographics can support,'' Ms. Nelda said. Mortgage application data from the Mortgage Bankers Association suggest a developing slowdown in buyer interest. The trade group has reported a decline in week-to-week purchase applications for three of the past four weeks. ``The data is showing that we'll see some weakening in sales,'' Mr. Puryear said. But existing-home sales are expected to remain healthy compared with last year, when a total of 3.8 million homes were resold, especially if interest rates drop further. ``Anything over four million units is a strong level,'' Mr. Puryear said.
