Mortgage rates boosted US home sales 1.3% in August

Business

FILE – In this Aug. 16, 2019, file photo an under contract sign is displayed along Park Avenue in Richmond, Va. On Thursday, Sept. 19, the National Association of Realtors reports on sales of existing homes in August. (AP Photo/Steve Helber, File)

WASHINGTON (AP) — U.S. home sales rose 1.3% in August to the highest level in 17 months, as mortgage rates near historic lows have spurred a rush of home-buying.

The National Association of Realtors said Thursday that homes sold last month at a seasonally adjusted annualized rate of 5.49 million units, the best performance since March 2018. Sales have increased 2.6% from a year ago.

The recent bump in home sales are a sign of U.S. consumers’ resilience despite a darkening outlook for growth. Cheaper borrowing costs have improved affordability for buyers, making them more eager to buy despite rising prices amid a shortage of properties for sale.

“Consumers seem to still be confident in their finances, and are clearly feeling good enough to make large purchases such as buying a home,” said John Pataky, executive vice president at TIAA Bank. “The prolonged period of low mortgage rates has helped pull buyers off the sidelines by making home purchases a more affordable proposition.”

The median sales price climbed 4.7% from a year ago to $278,200, outpacing average wage gains.

Homebuyers have been a beneficiary from the recent economic uncertainty, as interest rates have fallen in response to slower global growth and President Donald Trump’s tariffs against China.

The 30-year mortgage rate averaged 3.73% this week, down from 4.65% a year ago, according to mortgage buyer Freddie Mac.

Still, the upside is limited by a decline in sales listings. There were 1.86 million properties for sale at the end of August, down 2.6% from a year ago.

The inventory crunch appears to be most pronounced in starter homes priced below $250,000, the kinds of properties that are generally affordable for first-time buyers. Sales of homes worth less than $250,000 have fallen in the past year, while sales of home priced between $250,000 and $1 million have risen.

Copyright 2019 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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