WASHINGTON - Existing homes were sold at the fastest pace in history last month, as mortgage rates near a four-decade low helped drive prices to an all-time high.
But some private economists predicted yesterday that housing may be nearing its peak as mortgage rates begin to rise.
In June, existing homes sold at an annual rate of 7.33 million units, surpassing the previous record of 7.18 million reached in April, the National Association of Realtors said yesterday. The sales also represented an increase of 2.7 percent from the seasonally adjusted sales pace in May.
The gain reflected a 2.4 percent rise in sales of single-family homes, which climbed to a record of 6.37 million units at an annual rate. Sales of condominiums also set a record, rising by 4.5 percent from the May level to an annual rate of 966,000 units in June.
The strength in sales helped pushed the median price of an existing home to a record $219,000, a gain of 14.7 percent from the median, or midpoint, for homes sold a year ago. That was the biggest jump in prices in nearly 25 years, since a 15.6 percent year-over-year increase in November 1980.
And, while prices have risen five times as much as inflation, incomes are rising fast enough and mortgage rates are low enough to keep homes affordable. The average 30-year fixed mortgage rate was the lowest in 15 months in June. Though mortgage rates have risen for three straight weeks, they now stand at 5.73 percent for a 30-year mortgage.
"Just when you think sales activity is ready to settle into a more sustainable pace, the housing market continues to surprise," said David Lereah, the Realtors' chief economist. He noted that mortgage rates have defied expectations, remaining near rock-bottom levels this year even as the Federal Reserve has continued to raise short-term interest rates.
Analysts had forecast that June sales would be unchanged from a 0.6 percent decline in May after existing-home sales set a record in April.
But for June, sales were strong in all four regions of the country. The gains were led by a 5.5 percent increase in the West to an annual sales rate of 1.73 million units. Sales were up 3.4 percent in the Northeast, 1.9 percent in the Midwest and 1.1 percent in the South.
In the West, the median price of $317,000 is up 17.4 percent from June last year. Northeastern states have seen a 13.6 percent jump in the median price, to $250,000.
The median selling prices of previously owned homes in the Midwest and South are cheapest, at $177,000 and $193,000, respectively.
As long as mortgage rates continue to rise slowly, Lereah said, home sales should decline only slightly in the second half of the year.
Sales of existing and new homes have set records in the past four years and many analysts are looking for both sales groups to climb to new records this year as well.
The number of existing homes available for sale at the end of June rose by 3.8 percent to 2.65 million units, a 4.3 month supply at the June sales pace.
Realtors' President Al Mansell, of Salt Lake City, predicted that pressure on home prices would ease as sales slowed and more homes became available.
"Home prices continue to be bid-up in tight markets across the country," he said. "When the housing market eventually slows from red-hot levels, we should see some cooling in price gains."
The Associated Press and Bloomberg News contributed to this article.
Copyright © 2015, The Baltimore Sun