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U.S. home sales jump
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June 26, 2000: 12:08 p.m. ET
May existing home sales up 4.3% to 5.09M annual rate, higher than expected
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NEW YORK (CNNfn) - Sales of existing homes rose at a faster-than-expected pace in May as more buyers completed purchases agreed to earlier in the spring, a real estate group said Monday. At the same time, rising mortgage rates are expected to slow activity in the second half of the year.
 The Washington-based National Association of Realtors said sales rose 4.3 percent to an annual rate of 5.09 million, higher than April's 4.88 million rate and well above the 4.85-million pace expected by economists polled by Briefing.com.
"After setting a record low in January for the number of homes available for sale, many buyers were frustrated in early spring because there simply weren't enough homes on the market," NAR President Dennis Cronk said. "Many homes listed in March and April received quick offers, resulting in a higher number of transactions closed in May," he said.
The report comes a day before Federal Reserve policy makers meet to discuss the economy and interest rates. The Fed has raised short-term rates six times in the past year in a bid to slow economic growth and ward off inflation. The two-day meeting is expected to conclude with no change in rates, according to a majority of Wall Street economists polled by Reuters.
Housing prices rise
May's sales gains came as the rate on the average 30-year mortgage rose to 8.52 percent in May from 8.15 percent in April, according to national mortgage lender Freddie Mac. It was 7.15 percent in May 1999. At the same time, optimism that housing prices will continue to rise helped propel the market forward even as borrowing costs remained high, the NAR said.
 The median price of an existing home was $137,200 in May, up 3.3 from $132,800 in May 1999. The median sales price is the midpoint, where half the homes sold for more and half for less. Existing home sales figures are based mainly on closings, which usually come a month or two after the buyer signs a contract for the home.
Steven Wood, an economist with Banc of America Securities, said the data point to continued resiliency in the housing market, particularly because levels of housing activity remain high despite rising mortgage rates. "While this will not force the Fed's hand at this week's meeting, an August tightening remains a real possibility," he said.
At the same time, NAR economist Fred Flick said the effects of higher mortgage rates will be working their way through the market through the second half of the year, leading to slower sales. "The present sales pace is higher than our forecast for the year as a whole, and we're expecting sales to slow by 9 percent during 2000 to a total of 4.7 million," he said. 
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