Low mortgage rates helped push sales of previously owned homes in July to the highest level in more than a year as the housing industry continued to rebound from a winter slump.
It was the third straight monthly advance. Except for a dip in the Midwest, sales were up in every region, including a double-digit gain in the West.
Many economists have pinned their hopes on housing to help lead the economy out of its near standstill in the April-June quarter because of housing’s trickle-down effect on other sectors.
Not only does new construction itself feed the economy, but home sales usually lead to other big-ticket purchases - furniture, carpeting and appliances, for instance - which in turn produce jobs and incomes in other areas.
The National Association of Realtors reported Friday that sales of existing single-family homes rose 5 percent in July to a seasonally adjusted annual rate of 3.99 million, up from 3.80 million in June and the highest since a 4.01 million rate in June 1994.
Sales have risen every month since falling 6.4 percent in April to a 3.39 million rate, lowest since a 3.36 million rate in June 1992. They were up 7 percent in June and 4.7 percent in May<. “The steady month-to-month rise in sales indicates the housing market has benefited from lower mortgage rates, making houses more affordable for all buyers,” said Realtors President Edmund G. Woods Jr.
After rising to 9.19 percent last December, 30-year, fixed-rate mortgages began easing and averaged 7.61 percent in July.
That lowered the cost of financing a home purchase. For instance, the monthly payment on a $100,000 mortgage with a 7.5 percent interest rate is $699, while the payment on the same loan with a 9 percent rate is $805 - a difference of $106.
Adding to affordability in July was the median price of an existing home. It dropped to $115,900 from $116,200 in June. The median is the midpoint, meaning half of the homes cost more and half cost less.
Other sectors of the housing industry also have improved recently. Housing starts have risen for four straight months through July and sales of new homes were up in both May and June.
Regionally, sales of existing homes shot up 14.5 percent in the West, to a 870,000 annual rate. The median price was $148,300.
Sales rose 6.3 percent in the South, to a 1.52 million rate. The median price was $101,500.
In the Northeast, sales advanced 1.8 percent, to a 580,000 rate. The median price was $141,400.
But they fell 1 percent, to a 1.02 million rate, in the Midwest, where the median price was $96,500.