Sales of Existing Homes Down 5% in July

WASHINGTON — Sales of existing single-family homes, jolted by rising mortgage rates, dropped 5% in July, the first decline since January, a real estate trade group said Thursday.

The National Assn. of Realtors said sales of existing homes dropped to a seasonally adjusted annual rate of 3.63 million units last month, following a 6.4% increase in June.

The decline was the first since a 4.8% drop in January, with analysts blaming the setback on rising mortgage rates. Fixed-rate mortgages climbed to a nationwide average of 10.5% at the end of July and have risen even faster in August, topping 10.71% last week.

John Tuccillo, chief economist for the realtors, said even with the July drop in demand, sales were still at the second highest monthly level of the past year.

“Even with the recent and prospective increases in interest rates, sales in 1988 will almost certainly be higher than we anticipated at the beginning of the year,” he said.

The median price of a home rose from June to July by $1,400 to $91,600, up 3.7% from a year ago, when the median sales price for an existing home was $88,300.

For the first time in a decade, the Midwest led in year-over-year price changes, with an increase of 7% to a median price of $70,600. The Northeast remained the highest-priced region of the country, with a median price of $146,700 last month, up just 0.6% from a year ago.

The median price in the West was $123,500 last month, 4.2% higher than a year ago. the median price in the South of $85,600 was up 5.7% from a year ago.

Tuccillo said that the big jump in home prices in the Midwest reflected a rebound in the region’s Rust Belt industries because of the boom in manufacturing caused by rising export sales. He said the smaller price increase for the Northeast reflected some softening in demand after two years of strong sales.

All regions of the country except the West suffered sales declines in July.

The sharpest decline occurred in the South, where sales were down 7% in July to an annual rate of 1.32 million units. In the Northeast, sales dropped 6.8% to an annual rate of 690,000 units. Sales in the Midwest fell 5.1% in July, compared to June, but were 4.4% higher than a year ago.

The West saw sales rise 3.2% to an annual rate of 690,000 units in July.