Low mortgage rates stimulated sales of existing homes in July, producing a surprisingly large gain of 5%, to nearly 4 million, from the June total, the National Association of Realtors reported.
A survey of seven economists conducted last week by Dow Jones found that, on average, they had expected July sales of single-family homes to come in at 3.86 million units at a seasonally adjusted, annualized rate, up slightly from June's 3.78 million pace.
"The steady month-to-month rise in sales indicates the housing market has benefited greatly from lower rates, making houses more affordable for all buyers," said Edmund G. Woods Jr., president of the Realtors group.
He added that, while buyers customarily trade up during the summer, low mortgage rates have encouraged entry-level buyers to come into the market as well. "The low rates are making a good selling season even better in virtually all regions of the country," he said.
At a seasonally adjusted annual rate, sales reached 3.99 million - 1.3% ahead of the total in July 1994.
Sales were helped by a seasonal adjustment factor that some economists say fails to adjust adequately for stronger sales in the spring and summer months than in fall and winter.
Resales in the West produced the greatest month-to-month rise, up 14.5% to a pace of 870,000 units, from 760,000 units in June.
The resale rate also rose 6.3% in the South. Sales increased more modestly in the Northeast and Midwest.
John Tucillo, chief economist at the National Association of Realtors, said economic uncertainty caused lower sales last winter but that consumers are now more confident that mortgage rates would remain low.
"Opportunities for first-time homebuyers who otherwise could not afford to buy at this time have opened up," he said.
The Federal Home Loan Mortgage Corp. said the national average commitment rate for 30-year, conventional, fixed-rate mortgages was 7.61% in July, up from 7.53% in June but down from 8.63% the year before.
