US home sales hit new record
US home sales hit new record
26/8/2003 12:32
US existing home sales jumped to a record high in July, which analysts have suggested could be down to rising interest rates.

The National Association of Realtors (NAR) said existing home sales hit a record 6.12million annual rates in July, much higher than the 5.94million expected by analysts.

David Lereah, NAR's chief economist, said that rising interest rates could be behind the rise.

"When mortgage interest rates first began to rise from record lows, it appears some buyers jumped into the market to take advantage of good affordability conditions before interest rates moved even higher," he said.

Peak of the boom?

Average US house prices have risen by 12.1% in the past year, the fastest increase since November 1980.

The latest NAR figures reaffirmed expectations of a strong economic recovery in the second half of the year, and knocked the bond market in afternoon trading.

Some analysts suggested, however, that last month's figures could have marked the peak for America's housing market.

"Housing seems to be strong but people are buying houses in anticipation of much higher mortgage rates," said Frank Hsu, director of global fixed income at Fimat.

Other analysts cautioned that it would be a while before the Federal Reserve made any sharp increases to interest rates.

Kenneth Hackel, chief fixed income strategist at Merrill Lynch, said the market was being premature and noted that during the last 'jobless recovery' of 1990-1991, the Fed waited nearly 16 months between the last rate cut and the first rate hike.

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