Enticed by low mortgage rates, more people buy homes in July

WASHINGTON -- Motivated by low mortgage rates, house hunters turned into buyers, sending new-home sales in July to the highest monthly level on record and giving a solid boost to sales of previously owned homes.

The pair of housing reports, released Monday, provided a dose of good news for the economic recovery, which has been advancing, but in fits and starts.

Sales of new homes in July climbed to a seasonally adjusted annual rate of 1.02 million, a record monthly sales pace and a 6.7 percent hike from June's level, the Commerce Department reported Monday.

Meanwhile, sales of existing homes -- the biggest slice of the housing market -- rebounded in July, rising 4.5 percent from the previous month to a rate of 5.33 million units, according to the National Association of Realtors.

One of the bright spots of the spotty economic recovery has been the housing market, which performed well even during last year's recession, due largely to 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, according to Freddie Mac, the mortgage company.