New-home sales shot up by 6.7 percent last month to a seasonally adjusted annual rate of 1.02 million, the highest monthly level on record, the Commerce Department reported.
Existing-home sales, meanwhile, rose 4.5 percent in July from the previous month to a rate of 5.33 million units, the National Association of Realtors said in a second report.
One of the consistent bright spots of the spotty economic recovery has been the housing market, which even performed well during last year’s recession. The driving force behind the solid activity: low mortgage rates.
In July, the average rate for a 30-year fixed-rate mortgage was 6.49 percent, down from 6.65 percent in June, and well below the 7.13 percent rate for July a year ago. Last week, rates on 30-year mortgages edged up to 6.27 percent, after dipping to a 32-year low in the prior week.
“Mortgage interest rates were historically low in July. Combined with other strong market fundamentals, this is keeping the housing market on track for another record year,” said David Lereah, NAR’s chief economist.
The association is projecting existing-home sales for all of 2002 to reach 5.44 million, a 2.7-percent increase from last year’s record.
In June, new-home sales fell 2.6 percent to a rate of 953,000, according to revised figures.
The revisions show that June’s sales were weaker than the 0.5-percent gain the government previously thought. The downward revision also meant that sales did not set a record monthly level in June as initially reported.
By region, new-home sales in July soared 16 percent in the Midwest to a rate of 203,000, the highest level since December 1993. In the South, sales jumped 10.1 percent to a rate of 470,000, the highest level since November. But in the Northeast, sales fell by 9.1 percent to a rate of 60,000,and in the West, they dipped by 0.4 percent to a rate of 284,000.
The average price of a new home in July was $215,200, up from $209,300 for the same month a year ago.
The inventory-to-sales ratio dropped to 3.9 months in July, the lowest since December. That means it would take 3.9 months to exhaust the existing supply of homes available for sales at July’s sales pace.
For existing homes, July’s sales jumped 10.2 percent in the Midwest to a rate of 1.19 million. In the South, sales rose 6.4 percent to a pace of 2.17 million and in the Northeast, they went up 4.9 percent to a rate of 640,000. But in the West, sales slipped 2.9 percent to a rate of 1.33 million.
Nationwide, the median price of an existing home—meaning half sell for more and half sell for less—was $162,800 in July, a 7.3 percent increase from the same month a year ago.