WASHINGTON (AFP) – Sales of previously owned U.S. homes unexpectedly slipped in June amid rising interest rates but prices continued to rocket higher, a real-estate report released Monday showed.
The National Association of Realtors (NAR) said home sales fell 1.2 percent to an annual rate of 5.08 million in June, from a downwardly revised 5.15 million in May.
The average analyst estimate was for a rise to a 5.28 million pace in June.
Still, June sales were up a robust 15.2 percent from a year ago as the housing market gains traction six years after the collapse of a price bubble.
The housing recovery has been a bright spot in the sluggish economy, but the first monthly sales decline since March raised fresh concerns that rising interest rates could snuff it out.
Analysts generally said it was too soon to say whether the June dip reflected the sharp jump in mortgage interest rates that has followed Federal Reserve signals of an end to massive bond purchases.
“The decline in sales could be seen as evidence of housing already being hurt by the rise in mortgage rates but we think it is largely payback after exaggerated strength in May,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics.
The average 30-year mortgage interest rate has been on the rise since hitting a record low of 3.31 percent last November.
But the rise has accelerated sharply in recent months since the Fed Chairman Ben Bernanke began talking about tapering its $85 billion-a-month bond-purchase program if the economy continued to improve.
The average rate on a 30-year mortgage last week was 4.37 percent, according to mortgage giant Freddie Mac. That was up 15 percent from eight weeks earlier, when it stood at 3.81 percent.
With inventory tight, June home prices clocked the seventh consecutive month of year-over-year double-digit gains, NAR said.
The national median price was $214,200, up 13.5 percent from June 2012 and the 16th straight month of year-over-year price gains.
The last time there was such a long-running streak was from February 2005 to May 2006, at the peak of the price bubble.
Total housing inventory rose 1.9 percent in June. At the end of June there were 2.19 million previously owned homes on the market, a 5.2-month supply at the current sales pace, up from 5.0 months in May.
“Inventory conditions will continue to broadly favor sellers and contribute to above-normal price growth,” Lawrence Yun, NAR chief economist, said in a statement.
The surprisingly weak June home sales was the latest speed bump in the housing recovery. Last week the Commerce Department reported US housing starts plunged 9.9 in June and building permits fell 7.5 percent.
“Given that this comes after last week’s unexpected drop in housing starts, and the fact that Fed Chairman Bernanke singled out the housing market by acknowledging that although it is likely to recover ‘notwithstanding the recent increases in mortgage rates’, the central bank will ‘monitor developments in this sector carefully’, concerns about the resilience of this key sector will arise,” said Jennifer Lee of BMO Capital Markets.
A bright spot in the NAR report was the drop in sales of distressed homes — foreclosures and short sales — to 15 percent of June sales, down from 18 percent in May and 26 percent in June 2012.
NAR noted that that was the lowest share of distressed sales since monthly tracking began in October 2008.
Because distressed homes typically sell at a reduced price, the decline in their share helped to boost monthly price growth, it said.
NAR will report June sales of new homes on Wednesday.