Sales of existing homes rise to set record for June

Sales of existing homes rose 2.1 percent to a record in June as rising mortgage rates prompted a rush by Americans to close deals before rates went even higher.

The National Association of Realtors reported Monday that the increase in sales pushed the annual rate of existing home sales to an all-time high of 6.95 million units, beating the old record set in May of 6.81 million units.

The pace of home sales this year has surprised analysts, who had been predicting that sales would begin to slow, reflecting the fact that interest rates have started to increase.

"Although we've been expecting sales to ease, it's clear that the market has tremendous momentum," said David Lereah, chief economist for the Realtors. "The improving job market and higher consumer confidence are feeding into a large demographic demand for housing."

That is reflected in this year's home sales in and around Cape Girardeau County.

Martha Hamilton with Coldwell Banker Hamilton Realty in Cape Girardeau is the president of the Cape Girardeau County Board of Realtor's Multi Listing Service, which covers real estate sales in Cape Girardeau County, Scott City, southern Perry County and part of Bollinger County. She said that this year has been an extremely good year for home sales.

The listing includes both new and existing homes sold, Hamilton said, and sales this year have been up for both. She said that at the end of June 2003, $68 million in homes had been sold. At that same point this year, that number reached $72 million. While she didn't have exact numbers for June, Hamilton said business in that month at least equalled that of a record June in 2003.

Hamilton added that the average price of homes sold has risen this year from a little over $112,000 in 2003 to $115,800 in 2004. She too credits the boom to low interest rates, which she said are low enough to open the market to more people and make homes more affordable.

"We've even had shortages of homes" in the $70,000 to $140,000 range, Hamilton said.

Expecting record year

Lereah said that it was unlikely that the June record would be surpassed as he expected sales to cool a bit in coming months. But the Realtors said they still looked for sales for all of 2004 to set a new record, based on the surprising strength exhibited through the first half of the year.

While mortgage rates are up by about a percentage point from a year ago, analysts said that they remain at historically low levels. In fact, rates have backtracked a bit in recent weeks, with the 30-year mortgage falling to 5.98 percent last week, the first time it has been below 6 percent in three months.

"When you look at the economy, you see an improving job market and you still have low interest rates," said Tom Kunz, the head of Century 21 Real Estate Corp. "When you look at all of those factors, it makes for a great real estate market."

For June, the 2.1 percent increase in sales nationally from the May pace reflected strength in all parts of the country, led by a 3.5 percent increase in the Midwest, where sales rose to a record annual rate of 1.46 million units, 11.5 percent above the sales pace in June 2003.

Sales in the West also hit a record, climbing 3.1 percent from May to an annual rate of 1.99 million units, up 22.8 percent from a year ago.

Existing home sales were up 2.8 percent in the Northeast to an annual rate of 740,000 units, tying a record set in both September and October of last year. The June sales pace was up 15.9 percent from June 2003.

Sales in the South were up 0.4 percent to a record of 2.76 million units, an increase of 9.6 percent from a year ago.

The median sales price also hit a record in June, rising to $191,800, up from a price of $182,400 in May.

Staff writer Tony Rehagen contributed to this report.