July home sales strong
Mass., US gain when rate spike fails to appear
An expected spike in mortgage rates was supposed to cool off the red-hot housing market, but that spike failed to happen, and real estate sales remained strong in July both locally and nationally, according to reports released yesterday.
Nationwide, sales of existing single-family homes fell slightly from June's record pace and came in a bit below economists' expectations. But July still managed the third-best sales rate on record, the National Association of Realtors said.
Earlier in the year, mortgage rates were expected to rise as the economy gained momentum. Higher rates make homes more expensive and generally slow sales. But a jump in oil prices, a slowdown in consumer spending, and companies adding fewer jobs than expected helped contribute to a drop in mortgage rates in recent weeks, said John Bitner, chief economist at Eastern Investment Advisors, a division of Eastern Bank in Boston. "We've gotten this reprieve," he said.
"We thought rates would spike sharply, but that didn't materialize the way we thought it would," said Judy Moore, president of the Massachusetts Association of Realtors, who added she still expects rates to rise eventually and cause "some moderation" in sales activity in the second half of 2004.
Fear that this prolonged period of low mortgage rates will soon end has local consumers scrambling, Moore said. "People who were going to buy in the fall have been buying earlier," she said. "And some sellers who were planning to put their homes on the market in the fall" have already put out the for-sale signs.
Such behavior helped boost July results, she said. In the Bay State, the number of detached single-families sold set a July record of 5,781 homes, up 10.4 percent from July 2003, the realtors said. Following a seasonal pattern, unit sales for July were 2 percent below June numbers. Many house hunters buy in the spring and fall, causing a midyear lull, Moore said.
In July, the median sales price for a single-family was $350,000, up 11.1 percent from July 2003 but down 2.8 percent from June 2004, Massachusetts realtors reported. The national median existing-home price was $191,300 in July, up 8.7 percent from a year ago, the national association said.
In July, 2,103 condos were sold statewide, up 22.1 percent from July 2003, but down 9.2 percent from June 2004, the Massachusetts realtors said; the median sales price of a condo in July was $269,000, up 14.7 percent from July 2003 and up 1.5 percent from June 2004.
Helping this pace along was a dip in mortgage rates. Crunching data from Freddie Mac, a big mortgage buyer, the National Association of Realtors said the average rate for a 30-year conventional mortgage in July was 6.06 percent, down from a 6.29 percent in June. Freddie Mac's average last week was 5.81 percent.
Nationwide, July sales of existing homes worked out to a seasonally adjusted annual rate of 6.7 million, down 2.9 percent from the record pace of 6.9 million units in June. July's rate was 8.6 percent above the 6.2 million-unit pace in July 2003.
Chris Reidy can be reached at reidy@globe.com.
