U.S. July existing home sales jump to three-year high

Wed Aug 21, 2013 1:17pm EDT
 
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By Jason Lange

WASHINGTON (Reuters) - U.S. home resales jumped in July to their highest level in over three years, suggesting a sharp increase in borrowing costs is having only a limited impact on the housing market's recovery.

The National Association of Realtors said on Wednesday that existing home sales jumped 6.5 percent to an annual rate of 5.39 million units.

That was above analysts' expectations and could make the Federal Reserve more comfortable with its plans to wind down a major economic stimulus program. Plans to end the program have already pushed mortgage rates higher.

While some of July's surge in home resales may reflect buyers rushing to lock in rates before they rise further, the data inspired some confidence that the housing recovery was strong enough to withstand higher borrowing costs.

"The basic take-away is that the rise in mortgage rates has been manageable," said Ryan Sweet, an economist with Moody's Analytics in West Chester, Pennsylvania.

After being devastated by a financial crisis and the 2007-09 recession, the U.S. home market appeared to turn a corner early last year, helped by steady job creation and extremely low interest rates.

July's increase marked the fastest pace of sales since November 2009, when a home buyer tax credit was expiring. Such a strong rate of growth could prove temporary, however.

Applications for mortgages to buy homes rose slightly last week but have fallen sharply since the spring and remain near a seven-month low, a separate report from the Mortgage Bankers Association showed.   Continued...

 
A Tudor-style home is being renovated for resale in the Silver Lake neighborhood of Los Angeles, California August 5, 2013. REUTERS/Jason Redmond