NEW YORK (CNNfn) - Sales of existing homes rebounded sharply in August, rising at their fastest rate in more than a year, according to a trade group report Monday.|
The National Association of Realtors reported that sales of previously owned homes rose 9.3 percent to a seasonally adjusted annual rate of 5.27 million units last month, the biggest monthly increase since a 10.9 percent jump in June 1999.
The increase helps offset a 9.2 percent drop in July, when home sales slipped to a revised annual rate of 4.82 million as higher mortgage rates imposed this spring cut into the housing market.
The latest data exceeded the forecasts of analysts, who had called for an increase to 4.95 million units, according to a survey by Briefing.com.
Economists said the sales pickup reflects built-up demand over the last few months now that mortgage rates have fallen to about 8 percent. Demand is strong enough to keep sales strong for the rest of the year, although a drop-off in available homes on the market will thwart some potential homebuyers, said Ian Shepherdson, chief U.S. economist at High Frequency Economics.
"Looking forward, the strength of mortgage demand is easily strong enough to keep sales at or even above this level, but the inventory position remains very tight and this will keep a lid on sales," he said.
The quick rebound in home sales month over month also suggests that consumers have not been scared off by the Federal Reserve's efforts to slow down the economy by raising interest rates, economists said.
The housing market's resiliency "should give pause to those forecasting a Fed ease due to a softening economy," said David Orr, chief economist at First Union.
Existing home sales were strongest in the West and Midwest, with lower gains registered in the South and the Northeast.
The median price of an existing home decreased in August to $142,200, from $143,300 in July, but was 3.4 percent higher than August 1999 levels.