ICS Magazine

Existing Home Sales, Prices Hit Record Highs

July 26, 2004
WASHINGTON (Reuters) - Sales and prices of existing U.S. homes jumped to record highs in June as homebuyers rushed to take advantage of low mortgage rates, a trade association said on Monday.

Sales of previously owned homes rose 2.1 percent to a seasonally adjusted annual rate of 6.95 million units in June from an upwardly revised 6.81 million unit pace in May, the National Association of Realtors said.

Analysts had been expecting a fall to a 6.67 million unit rate.

Meanwhile, the national median home price rose to $191,800, a record high.

"There could be some rush of last-minute buyers realizing this could be their last opportunity to get into the home buying market," said Lawrence Yun, senior economist with the Realtors group.

The number had little initial impact on the financial markets although economists expressed surprise at the magnitude of the rise in sales.

"June is traditionally a big buying month. Mortgage rates are starting to go up, and people who had been waffling about buying a house are deciding they had better jump on board before the ship leaves the dock," said David Wyss, chief economist at Standard & Poor's in New York.

U.S. mortgage interest rates are not far above historic lows but are expected to track higher this year as the U.S. economy gains strength. Already tight inventories dipped to a 4.1-months' supply at the current sales pace.

The limited number of homes for sale has been driving prices higher in recent months. June's record median sales price was up from a record $182,400 in May and was 9.6 percent higher than the median price in June 2003.

"Home price increases are being driven by the fundamentals of strong demand and lean supply," Yun said.