Dow Jones
Sales of previously owned homes rose to their highest level in close to four years, possibly reflecting a spike in activity as buyers look to close deals before mortgage rates rise further.
Existing-home sales rose 6.5 per cent in July from a month earlier to an annual rate of 5.39 million, the National Association of Realtors said Wednesday. That was the best month of sales since November 2009, when a home buyer tax credit spurred activity.
Economists had predicted that sales would rise to a pace of 5.15 million.
"The current housing market recovery is on a solid footing," the Realtors group chief economist Lawrence Yun said.
Last month's existing-home sales were 17.2 per cent higher than a year earlier.
A resurgent housing market has helped the US economy, generating confidence among consumers, boosting household spending and creating construction jobs.
But there have been signs elsewhere that the market could stumble amid higher mortgage rates, skilled-labor shortages, higher materials costs and a lack of available land for new homes. Builders last month started construction on single-family homes at the slowest pace in eight months.
July's existing-home numbers, meanwhile, were likely inflated by a rush of buyers trying to lock in lower mortgage rates, TD Securities director of US research and strategy Millan Mulraine said.
"In this regard, with some sales being brought forward, we expect to see a fall-off in sales activity in the coming months as the higher borrowing cost tempers sales activity," Mr Mulraine said ahead of Wednesday's release.
The housing recovery will continue, though at a more moderate pace, he added.
Mr Yun concurred. "The increases in rates I think panicked some buyers," he said. The Realtors' group expects mortgage rates to rise to 5 per cent by year's end, reducing the pool of potential home buyers.
Mortgage giant Freddie Mac last week said that 30-year fixed mortgage rates averaged 4.40 per cent, up more than one percentage point since the start of May.
Federal Reserve officials have expressed some concern about rising interest rates. Still, recent signs of strength in the housing market could reassure Fed policy makers as they consider the next steps for the central bank's $85 billion a month in bond buying. The program has helped keep mortgage rates low.
Monday's report showed that home prices climbed, with the median price of homes sold in July at $213,500, up 13.7 per cent from a year earlier.